G.F. 323
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3.
the other hand, as world demand picked up for such light manufactures
as garments and toys, the limited capacity in exporting countries
Export transformed part of the excess demand into price increases.
prices of Hong Kong products in 1976 were roughly 11% higher than in
1975. These and the price movements of other expenditure components in
the gross domestic product caused the deflator for the gross domestic
product to be 8%.
4.
A
This difference between the gross domestic product deflator
and the increase in consumer prices can only be a temporary phenomenon.
high stock level built up in anticipation of the recovery will mean a slow
down in demand and a deceleration in export prices. On the other hand,
increases in world consumer demand will continue to put upward pressure
on the price of food and raw materials for as long as there is not an
offsetting increase in supply, possibly contributing to more rapid
increases in import and domestic prices in Hong Kong. If Hong Kong's
visible trade deficit widens, this will tend to reduce upward pressure
on the exchange rate and domestic prices in Hong Kong will cease to be
partly insulated from world price increases by an appreciating Hong
Kong dollar.
5.
The exceedingly high rate of growth in Hong Kong's gross
domestic product experienced in 1976 cannot be a sustained phenomenon.
A slow down in the growth to a level compatible with the growth in
world demand is inevitable, and there was already some evidence of this.
in the orders position of some manufacturing industries towards the
end of 1976.
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