VEDTIESDAY, FEBRUARY 25, 1975
17
THE MONEY SUPPLY, HE SAID, WOULD LIKELY INCREASE AT A SLOWER RATE IN 1975 THAN IN 1974. +TO A CONSIDERABLE EXTENT, THIS REFLECTS THE SLOWING DOWN OF INFLATION AND SHOULD NOT BE TAKEN TO MEAN THAT LIQUIDITY WILL BECOME GENERALLY TIGHTER.
>NOR SHOULD IT BE ASSUMED THAT ANY SLOWING DOWN IN THE GROWTH OF MONEY SUPPLY WILL, IN ITSELF, DRING ABOUT AN INCREASE IN INTEREST RATES. THESE WILL CONTINUE TO ROVE LARGELY IN SYMPATHY WITH INTEREST RATES ABROAD.+
IN GENERAL, M. HADDON-CAVE PREDICTED THAT INCOME AVAILABLE FOR CONSUMPTION AND INVESTMENT WOULD DE MUCH THE SAME, IN HONEY TERMS, AS LAST YEAR.
CONSUMER PRICES WOULD CONTINUE TO INCREASE, AND HE PREDICTED THAT, EVEN ALLOWING FOR THE UTILISATION OF HOUSEHOLD SAVINGS, REAL PRIVATE CONSUMPTION EXPENDITURE WOULD FALL, PERHAPS BY UP TO FIVE PER CENT.
+THIS REFLECTS THE LIKELIHOOD THAT WAGES AND SALARIES, AS WELL AS OTHER INCOMES, WILL INGREASE VERY MODESTLY THIS YEAR, IN MONEY TERMS, AS WELL AS THE EFFECTS OF A LOWER LEVEL OF EMPLOYMENT AND MORE SHORT TIME WORKING.✨
PRIVATE INVESTMENT EXPENDITURE ALSO SEEMED LIKELY TO FALL IN REAL TERMS. PRIVATE SECTOR DEMAND FOR DUILDING AND CONSTRUCTION WORK HAD ALREADY FALLEN FROM THE PEAK IN 1973 AND THERE WAS NO SIGN YET OF ANY RECOVERY, DESPITE THE EASING IN DUILDING COSTS SINCE MID-1974.
THERE HAD BEEN SUGGESTIONS THAT ASSURANCES ON FUTURE RENT CONTROL POLICIES AND RELIEF FROM THE PAYMENT OF RATES ON VACANT DOMESTIC PREMISES WOULD MATERIALLY INFLUENCE THE CLIMATE OF DEMAND FOR DOMESTIC PREMISES. +I HAVE MY DOUDTS FOR WE ARE NOW WITNESSING THE INEVITABLE REACTION TO THE EARLIER DOOM= YET BOTII SUGGESTIONS ARE BEING CONSIDERED BY THE GOVERNMENT.❖
HOWEVER, HE STRESSED THAT GOVERNMENT EXPENDITURE ON BOTH CONSUMPTION AND INVESTMENT WOULD CONTINUE TO INCREASE, IN MONEY TERMS, AND THIS WOULD REFLECT LIMITED REAL GROWTII.
THE FINANCIAL SECRETARY POINTED OUT THAT THE VIEW HE HAD TAKEN OF THE HONG KONG ECONOMY 1975 WAS A VIEW OF THE YEAR AS A WHOLE AND CONCEALED MOVEMENTS WITHIN THE YEAR.
HE ADDED THAT HE WAS NOT EXPECTING ANY SUBSTANTIAL UPTURN IN OVERSEAS DEMAND THIS YEAR, BUT HE ASSUMED THAT THE ECONOMY WOULD SHOW SOME SIGNS OF INCREASED ACTIVITY TOWARDS THE END OF THE YEAR.
/COVING 01 .....
I