WEDNESDAY, MARCH 1, 1978
11
SLOW DOWN IN GDP GROWTH RATE EXPECTED IN MID-1980'S
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A QUESTION MARK NOW HANGS OVER THE EXTENT TO WHICH HONG KONG CAN MAINTAIN INTO THE MID-1930S THE SEVEN PER CENT GROWTH RATE OF G.D.P. PER CAPITA WHICH IT HAS ENJOYED SO FAR IN THE 1970S, THE FINANCIAL SECRETARY, THE HON. PHILIP HADDON-CAVE, TOLD THE LEGISLATIVE COUNCIL TODAY.
HE SAID AS FAR AS GENERAL CONDITIONS FOR WORLD TRADE WERE CONCERNED, THE FORECAST FOR THE THREE YEARS 1979 TO 1981 AT PRESENT APPEARED TO BE MODERATELY EXPANSIONARY, ALTHOUGH THERE WERE UNCERTAINTIES CONCERNING THE ECONOMIES OF THE UNITED STATES AND GERMANY.
+ONE PROMISING FEATURE IS THAT THE OUTLOOK IS FOR THE RATE OF INFLATION TO CONTINUE TO FALL, + MR. HADDON-CAVE SAID. +THE IMPLICATION OF THIS IS THAT THERE MAY BE LESS OPPOSITION TO EXPANSIONARY POLICIES THAN WOULD OTHERWISE BE THE CASE.+
+BUT THE MAIN UNCERTAINTY REMAINS TO WHAT EXTENT WILL HONG KONG BE ABLE AND, PERHAPS MORE IMPORTANT, BE ALLOWED TO TAKE ADVANTAGE OF ANY GROWTH IN WORLD TRADE THAT RESULTS FROM THESE POLICIES?+ HE SAID.
+A FURTHER FACTOR WHICH WILL, IN ANY CASE, SLOW DOWN THE GROWTH RATE OF G.D.P. BY THE MID-1980S IS THE SLOW DOWN IN THE GROWTH RATE OF THE POPULATION OF WORKING AGE FROM THE PRESENT THREE PER CENT PER ANNUM TO JUST OVER ONE PER CENT,+ HE ADDED.
MR. HADDON-CAVE SAID THE G.D.P. FORECAST FOR 1978 -- AT NINE PER CENT IN REAL TERMS WAS THE SAME AS THE TREND GROWTH RATE EXPERIENCED BETWEEN 1961 AND 1977, BUT WAS HIGHER THAN THE RATE HE BELIEVED HONG KONG COULD EXPECT TO MAINTAIN THROUGH TO THE MID-1980S.
+FOLLOWING THE CONCLUSION OF THE RATHER RESTRICTIVE TEXTILES AGREEMENTS WITH THE UNITED STATES, THE E.E.C. AND OTHER COUNTRIES, THE GROWTH PROSPECTS FOR EXPORTS OF TEXTILES AND CLOTHING ARE DEFINITELY LESS THAN WOULD OTHERWISE BE THE CASE,+ HE SAID.
+ALTHOUGH, AS FAR AS TEXTILES AND CLOTHING EXPORTS TO THE E.E.C. ARE CONCERNED, THE IMMEDIATE EFFECT IN 1978 HAS ALREADY BEEN DISCOUNTED TO A GREAT EXTENT BY VIRTUE OF THE RELATIVELY LOW LEVEL OF EXPORTS IN 1977. THE NEW AGREEMENTS ARE SUCH THAT BOTH GROWTH AND FLEXIBILITY PROVISIONS FOR THE NEXT FIVE YEARS HAVE BEEN REDUCED SUBSTANTIALLY.
+THIS SHIFT TO PROTECTIONISM IS MOST WORRYING FOR, AFTER ALL, TEXTILES AND CLOTHING DO REPRESENT ABOUT HALF OF HONG KONG'S DOMÉSTIC EXPORTS AT PRESENT, HE ADDED.
MR. HADDON-CAVE POINTED OUT THAT THE CONSEQUENCES OF PROTECTIONISM IN TERMS OF THE GROWTH RATE OF THE ECONOMY MUST DEPEND ON HONG KONG'S ABILITY BOTH TO TRADE UP IN TEXTILES AND CLOTHING AND TO FIND NEW MARKETS FOR THESE TRADITIONAL EXPORTS= AND TO DEVELOP MARKETS FOR OTHER PRODUCTS.
/+I SUSPECT