- 26
expected to do so later in the financial year. The re
are signs of some localised overheating, for example
in the property market.
68
On the other hand, there are hopeful signs that,
despite the demands on resources being made by consumption,
the growth of domestically-produced exports will be
higher in 1978 than it was in 1977. Several factors
are contributing.
First a larger work-force has been
deployed than we thought possible. Second, the depreciation
of the Hong Kong dollar, at a time when world export
prices of raw materials are falling, has meant that our
exports are gradually proving more competitive. Third
there has been some improvement in demand in our major
markets, though our exports of textiles and clothing
are beginning to run up against the new and harsher quota
limits we were forced to accept last year.
69 The other components of exports, re-exports, looks
as if it will achieve an increase of about 25% in real
terms for the year, though its contribution to our net
foreign exchange earnings will be comparatively small.
It is too soon to say whether this heralds a resurgence of
Hong Kong's role as a regional entrepot, but meanwhile it is
most welcome. Thus, although exports as a whole will probably
grow at a higher rate in 1978 than will the gross domestic
product, we expect our net foreign exchange earnings to
continue to grow rather more slowly.