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BRIEF
HONG KONG ECONOMY
BACKGROUND
1. Textiles, which account for over 50% of total exports, are the mainstay of the economy. In 1975 overseas sales of garments, the biggest single export commodity, rose by 16% to over HK$10,000 million. This increase helped to mitigate the downturn in demand for some of the other major exports. Reliance on textiles as a major economic base is a cause for concern, not least because 65% of textile exports are subject to quota restrictions in importing countries. But Hong Kong is also the world's leading exporter of toys and a new HK$100 million polystyrene plastic manufacturing plant, due to come into operation this year, is expected to provide the industry with a cheap domestic source of raw materials and thus reduce expensive imports from Japan.
2. Hong Kong's export orientated economy is very sensitive to fluctuations in world demand and the world trade recession in 1974-75 hit Hong Kong hard. At the end of 1974 the economy was operating well below capacity: there was a considerable increase in unemployment (now thought to have reached 12%-14%), a decline in real wages and economic growth was zero.
3. Hong Kong has taken full advantage of the renewed demand in world markets from the spring of 1975 onwards. By the latter part of 1975 Hong Kong's exports showed an increase of 4% at constant The economy prices over the year as a whole compared with 1974.
has continued to recover in 1976 and is now believed to be approaching full capacity. Indications of the present state of the economy are given by the following figures drawn from the Hong Kong half-yearly Economic Report published in early September:
(a) The forecast of the increase in gross domestic product for 1976 was revised from 9% to 16% by the Financial Secretary at the beginning of September;
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