FRIDAY, NOVEMBER 27, 1981
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ANOTHER SIGNIFICANT CHANGE IN THE THIRD QUARTER WAS THE SLOW DOWN IN THE GROWTH RATE OF THE MONETARY AGGREGATES. THE MONEY SUPPLY, IN TERMS OF HK$M3, ACTUALLY CONTRACTED DURING EIRD QUARTER AND ITS ANNUALISED GROWTH RATE DURING THE FIRST NINE MONTHS OF THIS YEAR WAS VERY CLOSE TO THE FORECAST GROWTH RATE FOR 1981 OF THE GROSS DOMESTIC PRODUCT IN MONEY TERMS.
BUT THE REPLIT POINTS OUT THAT CONSUMER PRICES WERE STILL INCREASING FAIRLY RAPIDLY IN THE THIRD QUARTER, AS THE EFFECTS OF TH. DEPRECIATION OF THE EXCHANGE VALUE OF THE HONG KONG DOLLR AND THE FAIRLY HIGH RATE OF WORLD INFLATION WORKED THE IR WAY THROUGH THE ECONOMY.
APART FROM GIVING AN OVERALL VIEW, THE REPORT ALSO CONTAINS INDIVIDUAL CHAPTERS ON THE EXTERNAL SECTOR, THE FINANCIAL SECTOR, THE LABOUR SECTOR, ACTIVITY IN SELECTED SECTORS AND PRICES.
ON THE EXTERNAL SECTOR, THE REPORT EMPHASISES THAT THE DOMESTIC EXPORT SECTOR WAS HOLDING UP WELL DESPITE GENERALLY UNFAVOURABLE ECONOMIC CONDITIONS IN HONG KONG'S MAIN MARKETS. THE GROWTH RATE OF DOMESTIC EXPORTS IN REAL TERMS OF ABOUT 8 PER CENT
THE THIRD QUARTER WAS AN IMPROVEMENT OVER THAT IN THE FIRST HALF WHEN IT WAS LESS THAN 6 PER CENT. THE REPORT ATTRIBUTES THIS ENCOURAGING DEVELOPMENT TO THE ABILITY OF THE ECONOMY TO ADJUST EFFICIENTLY TO POORER TRADING CONDITIONS BY HOLDING DOWN INCREASES IN EXPORT PRICES BY MEANS OF REDUCED PROFIT MARGINS AND OF RELATIVELY SLOW RATES OF INCREASE OF MANUFACTURING WAGE RATES. THIS, THE REPORT POINTS OUT, COUPLED WITH THE DEPRECIATION OF THE HONG KONG DOLLAR, HAS HELPED THE DOMESTIC EXPORT SECTOR TO REMAIN COMPETITIVE.
THE VALUE OF IMPORTS WAS ALSO GROWING RAPIDLY, AT A RATE SLIGHTLY FASTER THAN THAT OF THE VALUE OF TOTAL EXPORTS (DOMESTIC EXPORTS PLUS RE-EXPORTS). AS A CONSEQUENCE
AS A CONSEQUENCE, THE VISIBLE TRADE +GAP+ (THE PROPORTION OF THE VALUE OF IMPORTS NOT COVERED BY THE VALUE OF TOTAL EXPORTS) IN THE THIRD QUARTER OF THIS YEAR WA LARGER THAN IN THE THIRD QUARTER OF 1980, IN ANALYSING THE NATURE OF IMPORTS RETAINED IN HONG KONG IN THE THIRD QUARTER, THE REPORT NOTES THAT, AT THE SAME TIME WHEN THERE WAS A SHARP DECELERATION IN THE GROWTH RATE OF RETAINED IMPORTS OF CONSUMER GOODS, THERE WAS A SHARP ACCELERATION IN THE GROWTH RATE OF RETAINED IMPORTS OF RAW MATERIALS AND SEMI-MANUFACTURES, WHICH SUGGESTED FURTHER IMPROVEMENTS IN RESPECT OF DOMESTIC EXPORTS IN THE NEAR FUTURE.
ON THE FINANCIAL SECTOR, THE REPORT INDICATES THAT THE SIZE OF MOST OF THE MONETARY AGGREGATES CONTINUED TO EXPAND IN THE THIRD QUARTER BUT AT A MUCH SLOWER RATE THAN IN THE FIRST TWO QUARTERS OF THIS YEAR. SOME HAVE ACTUALLY CONTRACTED. THIS FAVOURABLE DEVELOPMENT WAS MAINLY A REFLECTION OF A MARKED SLOWING DOWN IN THE GROWTH RATE OF LOANS AND ADVANCES FOR USE IN HONG KONG, AS A RESULT OF THE RESTRAINING INFLUENCE OF HIGH INTEREST RATES ON THE DEMAND FOR CREDIT. THE REPORT ALSO NOTES THAT CONDITIONS ON THE FOREIGN EXCHANGE MARKETS WERE UNSETTLED AMD THE EXCHANGE VALDE OF THE HONG KONG DOLLAR DEPRECIATED RATHER SUBSTANTIALLY DURING THE QUARTER DESPITE A SMAL. INFLOW OF FUNDS.
ON THE