TNAG-2978-FCO40-1470-Trade-relations-between-Hong-Kong-and-the-UK-1982 — Page 107

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RR FCO

RR DOT (OT4/2)

RR ECGD

GR 450

UNCLASSIFIED

NO RESTITUTION

TORÁM

WAS NOT ADVANCED

FM BTC HONG KONG 110900Z OCTOBER

TO PRIORITY EIS

Mr Buton ti

Mr House

TELEGRAM NUMBER EISER 37 OF 11 OCTOBER 1982

[DOT]

WP.

Lib.

WEG 2 TIREY Eley

EŚ.0

AND TO ROUTINE FCO FOR HKGD AND ECONOMIC SERVICES GROUP #1

DCT (OT4/2),

Do1 (014/2)

ELGA Country Police B/England Cristians

Div, London

ECGD COUNTRY POLICY DIVISION, LONDON, AND TO BANK OF ENGLAND OVERSEAS OFFICE.

ffec

WORLD ECONOMIC COMMENTS: QUARTER ENDED 30 SEPTEMBER 1982

HONG KONG

RATE OF EXCHANGE HONG KONG DOLLAR 10.41 - ONE POUND STERLING.

IN THE FIRST 8 MONTHS OF 1982 HONG KONG'S DOMESTIC EXPORTS IN REAL TERMS DROPPED BY ABOUT 3 PER CENT, RE-EXPORTS IN REAL TERMS SHOWED NO GROWTH AND TOTAL IMPORTS IN REAL TERMS DROPPED BY ABOUT 4 PER CENT. THE FINANCIAL SECRETARY IN HIS MID-TERM ECONOMIC REVIEW ON 30TH SEPTEMBER FORECAST A GROWTH RATE IN GDP OF 4 PER CENT FOR THE YEAR (COMPARED WITH HIS BUDGET FORECAST OF 8 PER CENT AND THE ACHIEVED GROWTH RATE OF 11 PER CENT IN 1931).

2.

ALTHOUGH HONG KONG DOLLAR RATES HAVE BEEN FALLING IT IS GENERALLY ACCEPTED THAT INTEREST RATES IN HONG KONG ARE STILL TOO HIGH IN BOTH REAL AND NOMINAL TERMS RELATIVE TO THE LEVELS PRIOR TO THE PAST TWO OR THREE YEARS. AS A RESULT MANY BUSINESSMEN ARE STILL UNDER CONSIDERABLE PRESSURE. THE PROPERTY MARKET IS A SECTOR WHERE HIGH INTEREST RATES HAVE HAD A MARKED DAMPENING EFFECT ON ACTIVITY.