TNAG-2921-FCO40-4196-Visits-and-proposed-visits-by-Alastair-Goodlad--Minister-of--1993 — Page 198

CONFIDENTIAL

FM HONG KONG

TO IMMEDIATE FCO

TELNO 1537

OF 29093OZ SEPTEMBER 93

INFO ROUTINE PEKING

CONFIDENTIAL

M. Wogrów

мир

026/2

RECE

- 1 OCT 1993

INDEX

OCTOBE

peapo

1/10

57

111403

MDHIAN 7173

TOP COPY Q DIST?

(49)

YOUR TELNO 817: VISIT BY MR.GOODLAD: 11-13 OCTOBER

1.

THE ECONOMY.

HONG KONG'S ECONOMIC GROWTH HAS BEEN SUSTAINED. GROSS DOMESTIC PRODUCT GREW BY AN ESTIMATED 5.3 PERCENT IN REAL TERMS IN THE FIRST QUARTER OF 1993 OVER A YEAR EARLIER FOLLOWING A SIMILAR

INCREASE IN 1992.

2.

ON DOMESTIC DEMAND, CONSUMER SPENDING GREW BY 7 PERCENT IN REAL TERMS IN THE FIRST QUARTER OF 1993 OVER A YEAR EARLIER, FOLLOWING AN 8 PERCENT INCREASE IN THE PRECEDING QUARTER. CONSUMPTION OF BOTH DURABLE AND NON-DURABLE GOODS CONTINUED TO SHOW A RELATIVELY LARGE INCREASE, WHILE CONSUMPTION OF VARIOUS CONSUMER SERVICES ALSO HAD A NOTABLE GROWTH. THE CONTINUED SHARP RISE IN

RETAINED IMPORTS OF CONSUMER GOODS AND IN RETAIL SALES SUGGEST THAT CONSUMER DEMAND CONTINUED TO INCREASE MARKEDLY IN THE SECOND QUARTER.

3. LOCAL INVESTMENT ROSE BY 7 PERCENT IN REAL TERMS IN THE FIRST QUARTER OF 1993 OVER A YEAR EARLIER, FOLLOWING AN INCREASE OF 10 PERCENT IN THE PRECEDING QUARTER. OF THE MAIN COMPONENTS, EXPENDITURE ON MACHINERY AND EQUIPMENT SURGED FURTHER. EXPENDITURE ON BUILDING AND CONSTRUCTION CONTINUED TO REVIVE. WORK ON A NUMBER OF MAJOR INFRASTRUCTURAL PROJECTS IN THE PUBLIC SECTOR REMAINED RELATIVELY SLACK. FURTHER GROWTH IN RETAINED IMPORTS OF CAPITAL GOODS SUGGEST THAT INVESTMENT SPENDING CONTINUED TO

INCREASE IN THE SECOND QUARTER.

4.

THE LABOUR MARKET REMAINED BROADLY STABLE. DURING THE THREE MONTHS ENDING JULY 1993, THE SEASONALLY ADJUSTED UNEMPLOYMENT RATE STOOD AT 2.1 PERCENT, AND THE UNDEREMPLOYMENT RATE AT 1.8 PERCENT. REFLECTING THE TRANSFORMATION OF THE ECONOMY TOWARDS SERVICES, EMPLOYMENT AS WELL AS VACANCIES IN MOST OF THE MAJOR SERVICE SECTORS CONTINUED TO RISE, BUT THOSE IN THE MANUFACTURING SECTOR TAKEN TOGETHER, TOTAL EMPLOYMENT RECORDED AN INCREASE.

5. CONSUMER PRICE INFLATION HAS BEEN ON A MODERATING TREND. THERE

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