TNAG-2622-FCO40-3813-Visits-by-Alastair-Goodlad--Minister-of-State-for-Foreign-an-1992 — Page 22

CONFIDENTIAL

155411

MDHIAN 6696

RESTRAINING INFLATIONARY PRESSURES IN THE SHORT TERM. SUSTAINED INVESTMENT IN MACHINERY AND EQUIPMENT AND THE ARRIVAL OF FOREIGN WORKERS UNDER THE 1992 LABOUR IMPORTATION SCHEME SHOULD ENABLE THE PRODUCTIVE CAPACITY OF THE LOCAL ECONOMY TO BE EXPANDED AND ALLEVIATE SOME OF THE CAPACITY CONSTRAINTS. STABLE WORLD COMMODITY PRICES ARE BEING REFLECTED IN THE PRICES OF IMPORTS, KEEPING IMPORTED INFLATION TO A LOW LEVEL. ON PRESENT INDICATIONS, LOCAL INFLATION IS LIKELY TO HOVER AT AROUND 9 - 9.5 PERCENT IN THE SECOND HALF. IN THE FIRST HALF OF THE YEAR, THE INFLATION RATE WAS 9.6 PERCENT. FOR 1992 AS A WHOLE, THE CPI(A) IS FORECAST TO BE 9.5 PERCENT IN CONTRAST TO AN INFLATION RATE OF

12 PERCENT IN 1991.

PATTEN

YYYY

ΜΑΙΝ

34

HKD

DISTRIBUTION

34

SEAD

NEWS D

ECONOMIC ADVISERS

RAD

PS/MR GOODLAD

SIR J COLES

NNNN