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The Economy
AFTER a year of rapid growth in 1984, the Hong Kong economy slowed down significantly in 1985. The gross domestic product (GDP) recorded only limited growth in real terms in 1985, compared with a growth rate of 9.3 per cent in 1984. The decline in domestic exports was the major factor behind the sluggish economic performance. Nevertheless, the unemployment and underemployment rates remained at a relatively low level, as the effect of job losses in manufacturing was, to a large extent, offset by increased employment in the services sectors, particularly those associated with the re-export trade. The rate of inflation was also relatively low.
Structure of the Economy
Hong Kong, because of its limited natural resources, has to depend on imports for virtually all of its requirements, including food and other consumer goods, raw materials, capital goods and fuel. It must, therefore, export on a sufficient scale to generate the foreign exchange earnings to pay for these imports, and the volume of exports must continue to grow if the population is to enjoy a rising standard of living.
The externally oriented nature of the economy can be seen from the fact that in 1985 the total value of visible trade (including domestic exports, re-exports and imports) amounted to 176 per cent of the gross domestic product. Between 1975 and 1985, the average annual growth rate of domestic exports in real terms was about 10 per cent, roughly twice the growth rate of world trade. As a result, Hong Kong ranks high among the world's trading economies.
Contribution of Various Economic Sectors
The relative importance of the various economic sectors can be assessed in terms of their value-added contribution to the GDP and their shares of total employment.
Primary production (comprising agriculture and fishing, and mining and quarrying) is relatively insignificant in terms of its contribution to the GDP and to total employment.
Within secondary production (comprising manufacturing, electricity, gas and water, and construction), manufacturing accounts for the largest share of the GDP as well as of employment. The contribution of manufacturing to the GDP, after a steady decline from 31 per cent in 1970 to 21 per cent in 1982, recovered in 1983 and 1984 to about 25 per cent, coinciding with the export boom over these years. The share of the construction sector in the GDP increased from four per cent in 1970 to eight per cent in 1981, before decreasing to five per cent in 1984 as building and construction activity slackened.
The contribution of the tertiary services sectors as a whole (comprising wholesale and retail trades and restaurants and hotels; transport, storage and communications'; the financial and related services sector; and the community, social and personal services