THE ECONOMY
The rate of consumer price inflation remained high in 1990. The Consumer Price Index (A) was on average 9.8 per cent higher in 1990 than in 1989. The corresponding rate of increase in this Index was 7.5 per cent in 1988 and 10.1 per cent in 1989. The additional inflationary pressures arising from the oil price hike since August became more apparent towards the end of the year.
Statistical data is at Appendices 7–11.
Structure and Development of the Economy
Because of limited natural resources, Hong Kong has to depend on imports for virtually all its requirements, including food and other consumer goods, raw materials, capital goods, fuel and even water. It must, therefore, export on a sufficient scale to generate 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 1990 the total value of visible trade (comprising domestic exports, re-exports and imports) amounted to 235 per cent of the GDP. If the value of imports and exports of services is also included, this ratio becomes 268 per cent. Between 1980 and 1990, Hong Kong's domestic exports grew at an average annual rate of eight per cent in real terms, which was roughly twice the growth rate of world trade. The corresponding average annual increase was 23 per cent for re-exports and 13 per cent for imports. With a gross value of $1,285 billion in overall visible trade in 1990, Hong Kong ranks high among the world's trading economies.
Contributions of the Various Economic Sectors
The relative importance of the various economic sectors can be assessed in terms of their contributions to the GDP and to total employment.
Primary production (comprising agriculture and fishery, mining and quarrying) is small in terms of its contributions to employment and to the GDP.
Within secondary production (comprising manufacturing; the supply of electricity, gas and water; and construction), manufacturing accounts for the largest share in terms of both the GDP and employment. The contribution of the manufacturing sector to the GDP declined steadily from 31 per cent in 1970 to 21 per cent in 1982. It then increased to 23 per cent in 1983, and to 24 per cent in 1984, before stabilising at around 22 per cent during the period 1985 to 1987. However, it fell to 20 per cent in 1988, and further to about 18 per cent in 1989, reflecting partly the slow-down in export growth and partly the continued expansion of the service sectors. The share of the construction sector in the GDP increased from four per cent in 1970 to eight per cent in 1981. It then declined to seven per cent in 1982 and six per cent in 1983, before settling at about five per cent during the period 1984 to 1989.
The contribution of the tertiary services sectors as a whole (comprising the wholesale, retail and import/export trades, restaurants and hotels; transport, storage and commu- nications; finance, insurance, real estate and business services; and community, social and personal services) to the GDP increased from 60 per cent in 1970 to 65 per cent in 1982. It fell to around 62 to 64 per cent during the period 1983 to 1986, before rising to 67 per cent in 1988 and 1989.
With regard to employment, the most notable change since the early 1970s is that, whereas the manufacturing sector still takes up a significant proportion of the employed workforce, its share has been on a continuous decline, from 47 per cent in 1971 to 41 per
55