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FRIDAY, AUGUST 8, 1975
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HOWEVER, THE FINANCIAL SECRETARY ADDED:+WELCOME AS THESE EARLY SIGNS ARE, A SUSTAINED RECOVERY OF OUR ECONOMY DEPENDS ON A GENERAL RECOVERY IN WORLD TRADE.+ HE CAUTIONED AGAINST EXPECTING TOO EARLY A RECOVERY. BUT, HE SAID, + CLEARLY THERE ARE SOME INDICATIONS, PARTICULARLY FROM THE UNITED STATES, THAT POINT TO A RENEWED GROWTH BEFORE THE END OF THIS YEAR.+
REFERRING TO THE GROSS DOMESTIC PRODUCT, MR. HADDON-CAVE SAID FINAL ESTIMATES FOR 1974 SHOW ZERO GROWTH IN REAL TERMS COMPARED WITH A PRELIMINARY ESTIMATE OF 1-1/2 PER CENT. THE FORECAST FOR 1975 IS ALSO FOR ZERO GROWTH, ALTHOUGH IT HAS BEEN SUGGESTED RECENTLY THAT HONG KONG COULD NOW EXPECT A REAL GROWTH RATE OF TWO OR THREE PER CENT THIS YEAR.
THE FINANCIAL SECRETARY SAID, HOWEVER, THAT BEARING IN MIND THE MARKED FALLS IN EXPORTS AND IMPORTS RECORDED IN THE FIRST HALF OF THIS YEAR, HIS ORIGINAL FORCAST OF ZERO GROWTH SHOULD STILL STAND.
ON THE MANAGEMENT OF PUBLIC FINANCES, MR. HADDON-CAVE STRESSED THAT IT WAS IMPORTANT FOR THE GOVERNMENT TO ENSURE THAT PUBLIC EXPENDITURE GREW AT MUCH THE SAME RATE AS THE ECONOMY AS A WHOLE.
+IF THE PUBLIC EXPENDITURE WERE TO GROW MORE RAPIDLY IN RELATION TO THE GROSS DOMESTIC PRODUCT FOR ANY LENGTH OF TIME. THEN THE SIZE OF THE PUBLIC SECTOR WOULD BECOME SUCH AS TO RESULT IN A DIVERSION OF RESOURCES AWAY FROM THE PRIVATE SECTOR AND SERIOUSLY IMPAIR THE LONGER TERM GROWTH PROSPECTS OF THE ECONOMY, HE SAID.
IN THE TEN YEARS TO 1972-73. THE RATIO OF TOTAL PUBLIC EXPENDITURE TO GDP FLUCTUATED AROUND 15 PERCENT. IN 1973-74 IT ROSE TO 16 PER CENT, IN 1974-75 IT WENT UP TO 19-1/2 PERCENT AND THIS YEAR THE RATIO WILL PROBABLY BE OVER 20 PER CENT.
MR. HADDON-CAVE SAID IT WAS QUITE CLEAR THAT THE INCREASE IN THE RATIO OF PUBLIC EXPENDITURE TO GDP COULD NOT BE ALLOWED TO CONTINUE UNCHECKED, +BECAUSE OF THE CONSEQUENCES THAT WOULD BEFALL THE ECONOMY IN GENERAL.+
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