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THE ECONOMY
64 The economy did better in 1977 than I expected this time last year. The growth rate of the gross domestic product in 1977 is now estimated to have been
about 11% in real terms which is significantly above
the average so far in the seventies.
The real earnings
of the labour force increased substantially and workers shared well in the benefits of economic growth.
65 But this undoubted progress was achieved against a less healthy background whose main characteristic was a more rapid growth in domestic demand than in exports situation not sustainable indefinitely in Hong Kong's
In 1977 we also faced a threat, on the international front, of a progressive slide into
protectionism.
circumstances.
66
These were our two main concerns as the economy entered 1978, and they remain today.
a
67 It is true that the Government's large fiscal surplus
in the financial year 1977-78 and the likelihood of a
surplus this year, and higher interest rates, have had
some restraining effect on domestic consumption. But
there are as yet few indications that the growth of
expenditure either on private consumption or on building and construction has begun to slow down, though it is