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THE ECONOMY
THE Hong Kong economy continued on a course of steady growth. The gross domestic product (GDP) rose by 5.5 per cent in real terms in 1994, with increases of 5.4 per cent in the first half and 5.6 per cent in the second half. The corresponding growth rate in 1993 was 5.8 per cent.
Externally, re-exports continued to register double-digit growth in 1994. Although the growth rate was less rapid than in previous years, this was the 12th successive year of strong growth, notwithstanding a much higher base of comparison. Re-exports have been providing the main impetus to overall export growth since 1987. Recently, however,-a greater volume of goods was being shipped out as transhipments rather than as re-exports, indicating that Hong Kong's external trade is undergoing further structural change.
With the continued shift in the composition of Hong Kong's exports towards re-exports, the performance of domestic exports has been far less impressive in recent years. Following the declining trend since the second quarter of 1993, domestic exports fell further in the first half of 1994, before recovering to register a small growth in the fourth quarter.
Imports rose markedly in 1994, supported by the strong growth in re-exports and a sharp increase in retained imports. During the year, there were more imports of a variety of items for local use, including capital goods and consumer goods. Apart from the need to replenish stocks which were depleted in the latter part of 1993, when retained imports were drastically reduced, the ongoing process of automation and mechanisation and the rising import requirements for the construction of the territory's infrastructure, also contributed to the increase. Along with this strong pick-up in imports, a larger visible trade deficit was recorded in 1994 than in 1993.
Exports and imports of services both continued to grow steadily in overall terms. Although tourism grew more slowly after the marked increase in 1993, trade-related services and offshore trading activities showed further notable growth. Exports of various other professional and support services also remained robust, in line with the development of Hong Kong as a regional trade, finance and business services centre. There was a sustained surplus in invisible trade that more than offset the deficit in visible trade.
Domestically, consumer spending registered a more moderate increase in 1994. The moderation was mainly due to weaker spending on consumer durables. Sales of clothing and footwear, however, remained strong. Investment spending, on the other hand, recorded an accelerated growth. Reflecting this, the growth rate of retained imports of capital goods rose
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