WEDNESDAY, FEBRUARY 27, 1980
5.
SECONDLY, THERE HAS BEEN AN INCREASING TENDENCY FOR FAMILIES TO PURCHASE THEIR OWN FLATS- AND, WITH A HIGH RATE OF INCREASE IN THE PRICES OF FLATS AND HIGHER MORTGAGE RATES, A LARGE PROPORTION OF THE INCOMES OF SOME FAMILIES WILL BE TIED UP IN MONTHLY HOUSEHOLD EXPENDITURE.
THIRDLY, THE SPURT IN THE GROWTH RATE OF PRIVATE CONSUMPTION EXPENDITURE FROM TWO PER CENT IN 1975 TO 8.8 PER CENT IN 1976 TO 18.4 PER CENT IN 1978 WILL CONTINUE TO DEPRESS REPLACEMENT DEMAND AS WAS PROBABLY THE CASE IN 1979.
ON GOVERNMENT CONSUMPTION EXPENDITURE, THE FORECAST GROWTH RATE IS 12 PER CENT, ROUGHLY THE SAME AS THAT ACHIEVED IN 1979.
ON GROSS DOMESTIC FIXED CAPITAL FORMATION, THE FORECAST GROWTH RATE IS 12 PER CENT COMPARED WITH THE ACHIEVED GROWTH RATE OF 23.7 PER CENT IN 1979. THE GROWTH RATE OF INVESTMENT IN PLANT AND MACHINERY IN 1980 IS 15 PER CENT, A SLOWDOWN FROM THE GROWTH RATE OF OVER 40 PER CENT ACHIEVED IN 1979 WHICH WAS THE RESULT OF A RAPID GROWTH RATE OF INVESTMENT IN TRANSPORT EQUIPMENT AND OFFICE MACHINERY. TOTAL EXPENDITURE ON BUILDING AND CONSTRUCTION IS 10 PER CENT WITH THE PRIVATE SECTOR GROWING BY FIVE PER CENT AND THE PUBLIC SECTOR, INCLUDING THE MTRC, BY 15 PER CENT.
1979 ANXIETIES RECEDING AS HK ENTERS 1980
******
THE ANXIETIES WITH WHICH WE WERE SEIZED AS WE ENTERED 1979 ARE BEGINNING TO RECEDE AS WE ENTER 1980, THE FINANCIAL SECRETARY, THE HON SIR PHILIP HADDON-CAVE, SAID THIS (WEDNESDAY) AFTERNOON IN PRESENTING HIS BUDGET.
SIR PHILIP POINTED OUT THAT INFLATION SUFFERED LAST YEAR WAS MAINLY IMPORTED, AND THAT THE ACCELERATING WORLD INFLATION WAS PARTLY A RESULT OF THE OIL SITUATION.
+WE MUST ALSO RECOGNISE THAT THERE IS LITTLE WE CAN DO, WHICH WOULD BE CONSISTENT WITH THE NEED TO MAINTAIN EXTERNAL COMPETITIVE- NESS, TO ISOLATE OURSELVES FROM WORLD INFLATION, HE SAID.
BUT, HE SAID, THIS WAS NOT SO IN THE CASE OF DOMESTICALLY GENERATED INFLATION AND IN A MARKET ORIENTED ECONOMY LIKE HONG KONG, PRICES INCREASE BECAUSE DEMAND EXCEEDS SUPPLY.
+UNDER NORMAL CIRCUMSTANCES, DOMESTICALLY GENERATED INFLATION ARISING FROM AN IMBALANCE BETWEEN THE DEMAND FOR, AND THE SUPPLY OF, RESOURCES WILL TEND TO CORRECT ITSELF. I SAY, UNDER NORMAL CIRCUMSTANCES, BECAUSE COMPLETE DEPENDENCE ON MARKET FORCES MAY INVOLVE A SOCIAL COST WHICH MAY BE TOO LARGE FOR THE COMMUNITY TO BEAR,+ SIR PHILIP EXPLAINED.
HE SAID THAT WHERE THERE WAS A POSSIBILITY THAT THIS WAS SO, DELIBERATE STEPS MIGHT HAVE TO BE TAKEN TO DAMPEN DOWN DOMESTICALLY GENERATED INFLATION, EITHER BY SLOWING DOWN DEMAND OR BY INCREASING SUPPLY,
/IN HIS