THE ECONOMY
virtues, the US Heritage Foundation ranks Hong Kong the freest economy in the world, while the World Economic Forum ranks Hong Kong the world's second-most- competitive economy, one place higher than in 1995.
Over the past two decades, the Hong Kong economy has nearly quadrupled. With its GDP growing at an average annual rate of about seven per cent in real terms, Hong Kong has outperformed the Organisation for Economic Co-operation and Development (OECD) countries and has been growing more than twice as fast as the world economy. Per capita GDP has almost tripled in real terms, equivalent to an average annual growth rate of about five per cent in real terms. Valued at US$24,500 in 1996, Hong Kong's per capita GDP was next only to Japan and Singapore in Asia. It has surpassed that of the United Kingdom, Canada and Australia, and was broadly at par with that of France. Benefiting from this respectable economic performance, the local workforce has been able to enjoy a continuous rise in income, both in money terms and in real terms.
Chart 1
Gross Domestic Product (year-on-year growth rate in real terms)
Percent
18.0
16.0
14.0
12.0
10.0
8.0
GDP
6.0
4.0
Per capita GDP
2.0
0
-2.0
T
1975
1977 1979 1981 1983 1985 1987
1989 1991 1993 1995
Over the past two decades, the Hong Kong economy has been expanding rapidly, with GDP growing by 7% per annum and per capita GDP by 5% per annum in real terms.
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As a small and open economy, Hong Kong's economic success owes a great deal to the remarkable performance of its external trade sector. Trade in goods and services expanded markedly over the past two decades with average annual growth rates of 14 per cent and 9 per cent respectively in real terms. Reflecting the highly externally- oriented nature of the Hong Kong economy, the total value of visible trade (comprising re-exports, domestic exports and imports) reached $2,940 billion in 1996, at a ratio of 246 per cent to the GDP. This compared with the corresponding ratios of 143 per cent in 1970, 148 per cent in 1980 and 221 per cent in 1990. Including the value of exports and imports of services, the ratio was 286 per cent in 1996. The