11
Moreover our export markets must absorb the effects of the
increases in oil price announced by the OPEC countries. Less specific,
but certainly in our minds, is the situations in Iran, the Middle East
and Rhodesia.
Nevertheless the encouraging fact is that order books and
imports of raw materials at the end of 1978 suggest that prospects for
the first half of 1979 are reasonably good though it is too early to
say what the latter half will bring us.
The Domestic Economy
So our prospects are quite good. But to fulfil them we must
bear certain basic conditions in mind.
First of all, our economy must be kept conducive to a healthy
export-led posture. There must be sufficient resources of labour and
capital on the right terms, to enable our export industries to fill
the orders that are available; there must be sufficient flexibility
in the economy to enable industrialists to adapt to new demands and
opportunities; imports retained for consumption must be commensurate
with our foreign exchange earnings, the bulk of which are from exports.
These, in the simplest terms, are the conditions of Hong Kong's
housekeeping. But over the last year it is clear that in spite of our
apparent prosperity these conditions have not been fulfilled.
The labour market has been too tight; the economy has been
somewhat overstretched; the growth of domestic consumption has
considerably exceeded that of exports; the visible deficit on external
account has widened.
/Some adjustment