WEDNESDAY, FEBRUARY 26, 1986
20
+THOUGH WE DO ADJUST SUBSEQUENTLY AS MUCH AS POSSIBLE, GENERALLY SPEAKING WE HAVE TO WORK ON THE BLUNT ASSUMPTIONS OF THE MEDIUM RANGE FORECAST. THESE ASSUMPTIONS SHOULD BE DEPENDABLE WHEN AVERAGED OVER A SERIES OF YEARS. BUT THEY WILL NOT BE ACCURATE FOR ONE YEAR, UNLESS WE ARE EXTRAORDINARILY LUCKY. IN 1985-86, PUBLIC SECTOR EXPENDITURE GROWTH THUS UNWITTINGLY NOSED AHEAD OF GDP GROWTH. THERE WAS OF COURSE AN OPPOSITE SWING THE PREVIOUS YEAR.+
SIR JOHN SAID THAT ON APRIL 1, 1986, FISCAL RESERVES ON GENERAL REVENUE ACCOUNT WILL BE ABOUT $15.6 BILLION. THE GOVERNMENT HAD NO NET DEBT. THIS WAS A STRONG POSITION, AS FOR MOST GOVERNMENTS SERVICE OF THE NATIONAL DEBT REPRESENTED A LARGE PORTION OF PUBLIC SECTOR EXPENDITURE. THE HONG KONG GOVERNMENT EARNED INCOME. FOR MOST GOVERNMENTS UNEXPECTED DISASTERS MEANT MORE BORROWING. HONG KONG HAD RESOURCES IN HAND.
STATING HE DID NOT WANT TO BE ACCUSED OF MISLEADING OPTIMISM, SIR JOHN NOTED THAT THE ECONOMY WAS NOW ENTIRELY EXTERNALLY ORIENTED, AND VISIBLE TRADE NOW REPRESENTED ABOUT 175 PER CENT OF GDP.
+AS HAS BEEN UNDERLINED IN 1985 WE ARE ALWAYS EXPOSED TO THE CYCLICAL WINDS THAT HOWL AROUND WORLD TRADE.
+FREQUENTLY WE CAN DO LITTLE TO HELP OURSELVES BEYOND PRUDENT MANAGEMENT OF PUBLIC FINANCES AND RELIANCE ON MARKET FORCES AND ON THE VIGOURS OF OUR PROPERLY MOTIVATED ENTREPRENEURS.
I THUS +OUR ECONOMY IS ALSO CHANGING SHAPE UNDER OUR EYES. MAKE NO APOLOGIES FOR WHAT SOME WILL UNDOUBTEDLY CALL EXCESS CONSERVATISM IN MY APPROACH TOWARDS HONG KONG'S PUBLIC FINANCES. THEY ARE NOW, I BELIEVE, AGAIN IN SOUND SHAPE. BUT EVEN THIS COMMENT WOULD BE PROVED SANGUINE BY EVENTS WHOLLY OUTSIDE OUR CONTROL.+
GDP UP BY ONE PER CENT
***
THE GROSS DOMESTIC PRODUCT (GDP) GREW BY ABOUT ONE PER CENT IN 1985, REPRESENTING A SIGNIFICANT SLOWING DOWN COMPARED WITH THE GROWTH RATE OF OVER NINE PER CENT IN 1984, THE FINANCIAL SECRETARY, SIR JOHN BREMRIDGE, SAID IN HIS BUDGET SPEECH TODAY.
SIR JOHN SAID THE PERFORMANCE OF THE ECONOMY WAS DISAPPOINTING, WITH THE MAJOR FACTOR BEING A FALL IN DOMESTIC EXPORTS THOUGH TOTAL EXPORTS STILL GREW BY SIX PER CENT.
DOMESTIC EXPORTS DECLINED BY FIVE PER CENT IN REAL TERMS REFLECTING THE SLOWDOWN IN ECONOMIC GROWTH IN OUR MAJOR EXPORT MARKETS, IN PARTICULAR THE UNITED STATES, AND THE RELATIVE STRENGTH OF THE HONG KONG DOLLAR.
/RE-EXPORTS