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MONDAY, SEPTEMBER 11, 1978
THE TOTAL MERCHANDISE TRADE DEFICIT IN THE FIRST HALF OF 1978 WAS 59 PER CENT HIGHER THAN A YEAR AGO. THE REPORT SUGGESTS THAT THE TRADE DEFICIT FOR THE LATTER HALF OF THE YEAR IS EXPECTED TO BE SMALLER AS DOMESTIC EXPORTS APPROACH THEIR SEASONAL PEAK.
ON MONEY AND BANKING, THE REPORT POINTS OUT THAT THE MONEY SUPPLY IN 1977 AND IN THE FIRST HALF OF THIS YEAR HAS BEEN INCREASING FASTER THAN THE GROSS DOMESTIC PRODUCT IN MONEY TERMS. THE RAPID GROWTH RATE OF THE MONEY SUPPLY IN THE FIRST HALF WAS PRIMARILY CAUSED BY THE INCREASE IN BANK LENDING. MOREOVER, THE REPORT SUGGESTS THAT BY ACCOMMODATING THE DEMAND FOR BANK LENDING, THE BANKING SYSTEM MAY HAVE HELPED TO EXERT SOME UPWARD PRESSURE ON SUCH DOMESTICALLY-DETERMINED PRICES AS THOSE FOR PROPERTY AND LABOUR, WHICH HAVE RISEN SUBSTANTIALLY+,
IT NOTES THAT DEPRECIATION OF THE HONG KONG DOLLAR DURING THE FIRST SIX MONTHS WAS DUE TO THE WIDENING TRADE DEFICIT AND THE RELATIVELY LOW LEVEL OF INTEREST RATES.
ON TEXTILE PRODUCTION, THE REPORT INDICATES THAT TOTAL SPINNING AND WEAVING PRODUCTION IN THE FIRST QUARTER OF 1978 FELL BY 13 PER CENT COMPARED WITH THE PREVIOUS QUARTER BUT WAS STILL 4 PER CENT HIGHER THAN IN THE CORRESPONDING QUARTER A YEAR AGO.
ON BUILDING AND CONSTRUCTION TRADE, THE REPORT POINTS OUT THAT BUILDING AND CONSTRUCTION ACTIVITY CONTINUED TO INCREASE RAPIDLY IN THE FIRST QUARTER THIS YEAR, THOUGH AT A SLOWER RATE THAN LAST YEAR. EXPENDITURE ON BUILDING AND CONSTRUCTION IN THE FIRST QUARTER BY THE PUBLIC SECTOR INCREASED AT A MUCH FASTER RATE THAN THAT BY THE PRIVATE SECTOR.
ON PRICE MOVEMENTS, THE REPORT INDICATES THAT CONSUMER PRICES HAVE REMAINED FAIRLY STABLE, WITH THE CONSUMER PRICE INDEX (A) BEING, ON AVERAGE, ONLY 5 PER CENT HIGHER IN THE FIRST SIX MONTHS OF 1978 THAN THE CORRESPONDING PERIOD A YEAR AGO. CONCERNING IMPORT PRICES OF RAW MATERIALS AND SEMI-MANUFACTURES, THE REPORT SHOWS THAT THEY HAVE REMAINED FAIRLY STABLE IN THE FIRST FOUR MONTHS. IT ADDS THAT AS THE HONG KONG DOLLAR HAS BEEN DEPRECIATING SINCE MARCH 1977 AGAINST THE CURRENCIES OF THE COUNTRIES FROM WHICH RAW MATERIALS AND SEMI-MANUFACTURES ARE IMPORTED, STABILITY IN THE HONG KONG DOLLAR PRICES OF RAW MATERIALS AND SEMI-MANUFACTURES IMPLIES AN OVERALL DECLINE IN THE WORLD PRICES OF SUCH COMMODITIES.
COMMENTING ON THE REPORT, A GOVERNMENT SPOKESMAN SAID THAT THE HONG KONG ECONOMY IN 1978 IS ON A COURSE OF MORE BALANCED GROWTH, WITH EXPORTS GRADUALLY REGAINING THEIR POSITION AS THE MAIN IMPETUS TO GROWTH. HOWEVER, HE SAID THAT THE HIGH LEVEL OF DOMESTIC DEMAND, TIGHT LABOUR MARKET AND RESTRICTIONS ON HONG KONG'S EXPORTS OF TEXTILES AND CLOTHING TO ITS MAJOR MARKETS WILL ADVERSELY AFFECT THE POTENTIAL FOR GROWTH OF DOMESTIC EXPORTS IN THE IMMEDIATE FUTURE.
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