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WEDNESDAY, FEBRUARY 25, 1976
NINE PER CENT GROWTH IN GDP PREDICTED
*****
THE FINANCIAL SECRETARY, THE HON. PHILIP HADDON-CAVE, TODAY FORECAST THAT THE GROWTH RATE OF THE GROSS DOMESTIC PRODUCT IN REAL TERMS IN 1976 WOULD BE NINE PER CENT.
SPEAKING ON HONG KONG'S ECONOMIC PROSPECTS, HE SAID EXPORTS WERE EXPECTED TO INCREASE BY EIGHT PER CENT OVER 1975, BUT HE ADDED THAT THIS WILL CERTAINLY NOT EXCEED THE TREND CAPACITY OF OUR ECONOMY TO PRODUCE GOODS FOR EXPORT+.
THE FINANCIAL SECRETARY SAID THAT THE VISIBLE TRADE DEFICIT WOULD RISE FROM LAST YEAR'S $3,641 MILLION TO $4,600 MILLION, BASED ON THE FORECAST FOR EXPORTS AND IMPORTS AT CURRENT PRICES.
MOVING ON TO WORLD TRADE, HE SAID ALTHOUGH IT WOULD RECOVER QUITE RAPIDLY TO THE 1974 LEVEL, OUTPUT WOULD NOT RISE SO FAST THAT CAPACITY WAS FULLY UTILISED.
FURTHERMORE, DESPITE THE LOW LEVELS OF CAPACITY UTILISATION, IT WOULD BE WRONG TO EXPECT LOW RATES OF WORLD INFLATION WHICH WERE, EVEN NOW, AT THIS EARLY STAGE OF RECOVERY, HIGH BY THE STANDARDS OF TEN OR MORE YEARS AGO.
MR. HADDON-CAVE SAID ALTHOUGH WORLD INFLATION WOULD CONTINUE, THE DIFFERENT TIMING OF RECOVERY IN DIFFERENT COUNTRIES WAS UNLIKELY TO PRODUCE A REPETITION OF THE VERY STRONG INFLATIONARY UPSURGE EXPERIENCED DURING THE LAST UPTURN IN 1973.
THE FINANCIAL SECRETARY FORECAST AN INCREASE IN THE PRICES OF RAW MATERIALS AND SEMI-MANUFACTURES OF 13 PER CENT IN 1976 WHICH, HE SAID, WOULD RESULT IN HONG KONG'S OWN PRICES STARTING TO MOVE UPWARDS.
BUT HE ADDED THAT CONCERN OVER RENEWED INFLATION WAS LIKELY TO LEAD TO GOVERNMENTS INTERVENING IN THE RECOVERY AND MODERATING ITS' SPEED.
PRIVATE CONSUMPTION EXPENDITURE, MR. HADDON-CAVE SAID, WAS PROBABLY ABOVE ITS TREND GROWTH LEVEL IN 1973, BUT VIRTUALLY NO GROWTH BETWEEN THEN AND 1975 HAD LEFT ROOM FOR SOME CATCHING UP.
HE POINTED OUT THAT THE GROWTH OF THE STOCK OF MONEY RELATIVE TO OUTPUT IN THE LAST TWO YEARS WAS ALSO LIKELY TO CONTRIBUTE TO THE GROWTH OF CONSUMPTION.
+AN EIGHT PER CENT INCREASE IN PRIVATE CONSUMPTION AT CONSTANT PRICES+, HE ADDED, +WILL STILL MEAN ONLY A MODEST AVERAGE GROWTH IN PER CAPITA CONSUMPTION OVER THE PERIOD 1973 TO 1976.+
PUBLIC CONSUMPTION EXPENDITURE WAS FORECAST TO GROW BY TEN PER CENT AT CONSTANT PRICES.
MR. HADDON-CAVE
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