G.F. 316
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147. If they are borne out, economic growth in 1985 will continue to be export-led, but with an increasing contribution
from domestic demand. The growth rate of total final demand (excluding re-exports), at 8.5%, is expected to exceed that of the GDP,
GDP, at 7%, but not sufficiently to generate significant internal inflationary pressures.
148.
exchange
Under the linked exchange rate system, inflation in Hong Kong is expected to continue to fall in
to fall in 1985 to level
closer to that in the United States. The average rate of inflation in 1985 is thus expected to be about 5.5%, significantly less than the 8.1% in 1984. The forecast rate of increase in the GDP deflator is rather higher than that for the
CPI at about 7%.
149.
The forecast growth rate of the GDP terms is therefore 15%, implying a current price GDP of $286 billion. At current prices, per capita GDP in 1985 should thus be over $52,000, or about US$6,700.
rate of the GDP in 1985 in money
150.
Sir, there is reason to trust the innate wit and
intelligence of our citizens. The majority can see that over a cycle of years a balanced budget for Hong Kong is as essential as it is in their own households. This is being achieved by continual downward pressure by
by the Administration on public sector expenditure and by continual upward pressure on
upward pressure on revenue. There are now many, and
and there will be many more, decent minded people who advocate increased government spending in sectors in which they have a special interest. It is, however, a fact of life that literally no limit can be put on expenditure representing various social aspirations unless tight controls are maintained on the taxpayers' money and on the levying of new Further increases in direct taxation in particular are
at least undesirable. Wise spending there must be; and indeed
more as the community gets richer. But every new proposition must be subject to test by two simple questions. What are the priorities? Where is the money coming from? Deficit finance is a profligate's refuge particularly in the light of Hong Kong's
taxes.
INCLASSIHLE
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