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FRIDAY, SEPTEMBER 14, 1979
HE ALSO EXPLAINED THAT THE REVISED FORECAST FOR THE GROWTH RATE OF DOMESTIC EXPORTS IS 13 PER CENT, COMPARED WITH SEVEN PER CENT IN THE BUDGET SPEECH FORECAST AND 10.5 PER CENT ACHIEVED IN 1978- WHILST THE REVISED FORECAST FOR THE GROWTH RATE OF RE-EXPORTS IS 27 PER CENT, COMPARED WITH 12 PER CENT IN THE BUDGET SPEECH FORECAST AND 27 PER CENT ACHIEVED IN 1978.
ON PRICES, THE FINANCIAL SECRETARY SAID THE REVISED FORECAST FOR THE RATE OF INCREASE IN CONSUMER PRICES IN 1979 IS 11 PER CENT, COMPARED WITH NINE PER CENT IN THE BUDGET SPEECH FORECAST AND SIX PER CENT IN 1978. THE REVISED FORECAST FOR THE RATE OF INCREASE IN THE GDP DEFLATOR IS ALSO HIGHER AT 14 PER CENT, COMPARED WITH EIGHT PER CENT IN THE BUDGET SPEECH FORECAST AND 5.5 PER CENT IN 1978.
MR. HADDON-GAVE ALSO OUTLINED IN DETAIL THE IMPLICATIONS FOR THE ECONOMY OF THE REVISED FORECAST. WITH ONE +IMPORTANT EXCEPTION+ THESE IMPLICATIONS REPRESENT AN IMPROVEMENT IN THE SITUATION ENVISAGED IN THE BUDGET SPEECH AND ON ACTUAL EXPERIENCE IN 1978.
THE IMPROVEMENTS INCLUDE A GROWTH RATE OF TOTAL DEMAND (13.7 PER CENT) WHICH IS MORE IN LINE WITH THE GROWTH RATE OF THE ECONOMY'S OUTPUT, AS MEASURED BY THE GROWTH RATE OF GDP (12 PER CENT). SO THE GROWTH RATE OF IMPORTS (15 PER CENT) is NOW SLOWER THAN THE GROWTH RATE OF EXPORTS (16 PER CENT). THIS MEANS THAT THE VISIBLE TRADE GAP, NAMELY, THAT PROPORTION OF THE VALUE OF IMPORTS NOT PAID FOR BY TOTAL EXPORT EARNINGS, IS ACTUALLY NARROWING INSTEAD OF WIDENING.
MR. HADDON-CAVE SAID THAT THIS NARROWING TRADE GAP +HAS CERTAIN IMPLICATIONS FOR THE EXCHANGE VALUE OF THE HONG KONG DOLLAR OVER THE NEXT FEW MONTHS ......
HE ADDED, HOWEVER, THAT EXCHANGE RATE MOVEMENTS WILL ALSO BE + INFLUENCED BY THE MEDIUM TERM OUTLOOK FOR THE ECONOMY IN 1980-81 .....*.
THE REVISED FORECAST FOR THE GROWTH RATE OF DOMESTIC DEMAND 12 PER CENT) IS ACTUALLY LESS THAN THE GROWTH RATE OF EXPORTS (16 PER CENT). THIS MEANS, MR. HADDON-CAVE SAID, THAT THERE HAS BEEN A SHIFT OF RESOURCES IN FAVOUR OF THE MANUFACTURING SECTOR. ALSO, AS ENVISAGED IN THIS YEAR'S BUDGET, THE RELATIVE SHARE OF RESOURCES USED BY THE PUBLIC SECTOR IS LESS THAN IN 1978.
THE IMPORTANT EXCEPTION+ MR. HADDON-CAVE REFERRED TO IN HIS ANALYSIS OF THE IMPLICATIONS OF THE REVISED FORECAST FOR THE ECONOMY IS THAT THERE IS STILL A CONTINUING IMBALANCE BETWEEN THE DEMAND FOR. AND THE SUPPLY OF, RESOURCES INVOLVING AN ACCELERATION IN THE RATE OF INCREASE IN PRICES.+
WHILE POINTING OUT THAT THE PRESSURE OF DEMAND ON RESOURCES IS NOW COMING FROM THE EXPORT SECTOR AS WELL AS THE SECTORS CATERING FOR DOMESTIC DEMAND+, MR. HADDON-CAVE EXPRESSED CONCERN ABOUT THE PRESSURE ON THE BUILDING AND CONSTRUCTION INDUSTRY WHICH, HE SAID, WAS +PARTICULARLY MARKED WITH BUILDING AND CONSTRUCTION COSTS INCREASING AT AN ANNUAL RATE OF 35 PER CENT. HE EMPHASISED THAT THIS MAKES IT EVEN MORE ESSENTIAL FOR THE PUBLIC SECTOR TO OBSERVE STRICTLY THE PLANNED SLOW DOWN IN THE GROWTH RATE OF EXPENDITURE ON CAPITAL WORKS+.
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