Friday, March 29, 1974
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DANGERS OF INFLATION OUTLINED AT ECAFE MOUNTING
Hong Kong Stresses Need For Reform In International Monetary System
The Secretary for Economic Services, Mr. Derek Jones, today
spoke about the dangers now facing the world economy.
Addressing the 30th plenary session of the Economic Commission
for Asia and the Far East (ECAFE) in Colombo, he said the major danger
was the "high and accelerating rate" of world inflation.
Last year, Mr. Jones pointed out, Hong Kong suffered a degree
of inflation "unprecedented in our experience", most of it externally
induced through the higher prices ruling in world markets.
The cost of living rose by more than 15 per cent, import prices
To this by over 20 per cent and food prices by more than 25 per cent, dangerous situation has now been added a four-fold increase in the price-
of oil, the world's major source of energy.
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This, he said, would undoubtedly result in further price increases across a wide spectrum of goods and services, thus producing severe strains on the balances of payments of all oil importing countries, both developed
and developing.
"All this increases the urgency of reaching agreement on reforms in the international monetary system, for there is no doubt that the Bretton Woods System of fixed exchange rates has broken down under the strains of
recent years," he added.
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