5. DESPITE THE ACCELERATION IN THE GROWTH RATE OF DOMESTIC EXPORTS,
THE CROWTH RATE OF TOTAL FINAL DEMAND NOW SEEMS
TO BE MORE IN LINE WITH THE GROWTH RATE OF THE ECONOMY'S OUT,
FOR THE GROWTH RATE OF IMPORTS IS SLOWING DOWN. INCREASES IN
INTEREST RATES IN RECENT MONTHS HAVE HELPED TO BRING ABOUT THIS
BETTER BALANCE THROUGH SLOWING DOWN THE GROWTH RATES OF BANK
LOANS AND THE MONEY SUPPLY.
6. THE GROWTH RATE OF IMPORTS IN THE FIRST HALF OF 1979 WAS LESS
THAN THE GROWTH RATE OF TOTAL EXPORTS. THUS, THE VISIBLE TRADE
GAP, DEFINED AS THAT PROPORTION OF IMPORTS THAT ARE NOT PAID FOR BY TOTAL EXPORT EARNINGS, IS NARROWING. THIS, TOGETHER WITH THE CAPITAL MOVEMENTS TO BE EXPECTED FROM HIGHER INTEREST RATES,
HAS CONTRIBUTED TO STABILISING THE EXCHANGE VALUE OF THE HONG KONG
DOLLAR.
!
7. HOWEVER, THE PRESSURE ON RESOURCES ARISING FROM EXCESS DEMAND,
FOR GOODS AND SERVICES PRODUCED IN THE ECONOMY STILL EXISTS,
ALTHOUGH THE SOURCE OF THE PRESSURE IS NOW THE EXPORT SECTOR AS WELL.
AS THE SECTORS CATERING FOR DOMESTIC DEMAND. THE LABOUR MARKET IS
STILL VERY TIGHT AND WAGE RATES HAVE INCREASED RAPIDLY IN 1979
(UP BY 20 PERCENT IN MARCH 1979 COMPARED WITH MARCH 1978), WITH DOMESTIC PRICES ACCELERATING. CONSUMER PRICES, FOR EXAMPLE,
INCREASED AT AN ANNUAL RATE OF ABOUT 9 PERCENT IN THE FIRST HALF
OF 1979. THE PRESSURE ON RESOURCES WAS PARTICULARLY MARKED IN THE
BUILDING AND CONSTRUCTION SECTOR. THE RATE OF INCREASE IN BUILDING
AND CONSTRUCTION COSTS ACCELERATED IN THE FIRST HALF OF 1979
TO AN ANNUAL RATE OF BETWEEN 30 PERCENT TO 40 PERCENT.
MACLEHOSE
FILES
HK 400
PS/MR. BLAKER
MR. MURRAY
el .