TUESDAY, AUGUST 19, 1980
1
ECONOMIC GROWTH EXPORT-LED WHILE INFLATION SLOWS DOWN
*****
THE TREND OF EXPORT-LED ECONOMIC GROWTH, WHICH WAS ESTABLISHED IN 1979, CONTINUED DURING THE FIRST HALF OF 1980.
THIS WAS SPELT OUT IN THE GOVERNMENT'S HALF-YEARLY ECONOMIC REPORT RELEASED TODAY AND ON SALE AT THE GOVERNMENT PUBLICATIONS CENTRE AT $14 A COPY.
THE REPORT REVIEWS PRIMARILY EVENTS IN THE FIRST HALF OF THIS YEAR. IT POINTS OUT THAT THE EXTERNAL SECTOR WAS REMARKABLY ACTIVE DESPITE THE FACT THAT THE ECONOMIES OF SOME OF HONG KONG'S MAJOR EXPORT MARKETS WERE MOVING INTO RECESSION. IT ALSO SUGGESTS THAT THE GROWTH RATE OF DOMESTIC DEMAND APPEARED TO PICK UP IN THE FIRST HALF OF 1980. NEVERTHELESS, ALTHOUGH THE PRELIMINARY NATIONAL ACCOUNTS ESTIMATES OF 1980' WERE NOT YET AVAILABLE, DOMESTIC EXPORTS PROBABLY STILL PROVIDED THE MAIN IMPETUS TO ECONOMIC GROWTH AS THE GROWTH RATE OF DOMESTIC DEMAND WAS VERY UNLIKELY TO HAVE OVERTAKEN THAT OF DOMESTIC EXPORTS.
THE REPORT ALSO POINTS OUT THAT THE PRESSURE OF DEMAND ON DOMESTIC RESOURCES HAS EASED CONSIDERABLY IN THE PAST YEAR. IT ADDS THAT THIS DEVELOPMENT WAS MOST CONSPICUOUS IN THE LABOUR SECTOR WHERE THE PREVIOUS EXCESS DEMAND FOR LABOUR APPEARED TO HAVE BEEN SATISFIED, LARGELY BY A SUDDEN INCREASE IN SUPPLY, AS A RESULT OF IMMIGRATION. THE RATE OF INCREASE IN BUILDING AND CONSTRUCTION COSTS HAD ALSO SLOWED DOWN. THE PROPERTY MARKET, WHICH HAD BEEN VERY MUCH OVERHEATED IN 1979, COOLED DOWN SOMEWHAT IN THE FIRST SIX MONTHS OF THIS YEAR.
AS FOR INFLATION, THE REPORT INDICATES THAT INFLATIONARY PRESSURES IN THE ECONOMY APPEAR TO HAVE BEEN EASING OFF DESPITE THE FACT THAT THE RATE OF INCREASE IN WORLD PRICES HAS BEEN ACCELERATING.
ON THE BEHAVIOUR OF THE MONEY SUPPLY, THE REPORT EXPLAINS THAT IT HAS BEEN RATHER ERRATIC IN THE FIRST HALF OF 1980 AND THAT IT IS DIFFICULT TO INTERPRET THE MOVEMENTS OF MONETARY AGGREGATES IN TERMS OF THE IR PRECISE IMPLICATIONS FOR THE ECONOMY. NEVERTHELESS, THE DOWNWARD ADJUSTMENTS IN INTEREST RATES IN RECENT MONTHS WILL PROBABLY HAVE STIMULATED THE DEMAND FOR LOANS, PARTICULARLY THOSE FOR PURCHASING PROPERTY OR STOCKS.
THE REPORT CONTAINS INDIVIDUAL CHAPTERS ON THE EXTERNAL SECTOR, THE FINANCIAL SECTOR, THE LABOUR SECTOR, PRODUCTION, AND PRICES, PRECEDED BY A CHAPTER GIVING THE OVERALL VIEW.
/EXTERNAL SECTOR