3
WEDNESDAY, MARCH 1, 1989
MR JACOBS SAID DOMESTIC DEMAND HAD CONTINUED ΤΟ BE BOOSTED MAINLY BY CONSUMER SPENDING AND BY INVESTMENT IN PLANT AND EQUIPMENT.
ACCOUNTS IN NATIONAL
TERMS, PUBLIC SECTOR EXPENDITURE GREW MORE SLOWLY THAN THAT OF THE PRIVATE SECTOR.
THERE
"LET ME ADD THAT, IN THE CURRENT INFLATIONARY SITUATION, IS PARTICULAR MERIT IN SEEKING TO KEEP DOWN THE SHARE OF AVAILABLE RESOURCES ABSORBED BY THE PUBLIC SECTOR.
"AS DOMESTIC EXPORTS GREW BY NEARLY NINE PER CENT WHILE DOMESTIC DEMAND GREW BY ABOUT SEVEN PER CENT, THE FORCES DRIVING
THE ECONOMIC GROWTH IN 1988 WERE MORE BALANCED THAN IN
PREVIOUS TWO
YEARS.
OF THAT
OUTPUT. "HOWEVER, THE GROWTH RATE OF DEMAND EXCEEDED
DEFICIT THUS, WITH FULL EMPLOYMENT, NOT ONLY WAS THERE A
ON VISIBLE TRADE, BUT ALSO THE RATE OF INFLATION INCREASED DURING THE YEAR,' SAID.
HE
INFLATION A MAIN PROBLEM
WAS
INFLATION,
THE BUDGET SPEECH
ONE OF THE MAIN PROBLEMS HONG KONG HAD TO FACE BUT WHAT THE GOVERNMENT COULD DO TO EASE THE PROBLEM WAS LIMITED, FINANCIAL SECRETARY, THE HON PIERS JACOBS, SAID IN HIS TODAY (WEDNESDAY).
IN 1988 HE SAID THAT THE 7.5 PER CENT RISE IN CONSUMER PRICES
KONG. HIGHER THAN THE WAS HIGH FOR HONG
SEVEN PER CENT HE HAD
FORECAST LAST YEAR.
HONG
THERE WERE FEW VIABLE THE PLAIN FACT OF THE MATTER WAS THAT POLICY OPTIONS OPEN TO A SMALL, EXTERNALLY-ORIENTED ECONOMY LIKE KONG'S TO CURB INFLATION, HE SAID.
SHOULD,
ON THE MONETARY SIDE, HE SUGGESTED THAT INTEREST RATES AS FAR AS POSSIBLE, BE KEPT HIGH.
"BUT IT IS IMPORTANT TO RECOGNISE THAT WHAT WE CAN DO IN ENSURE EXCHANGE AREA IS CONSTRAINED BY THE OVER-RIDING NEED TO
HE SAID. STABILITY WITHIN THE LINKED EXCHANGE RATE SYSTEM,
THIS RATE
HAD
INFLATION THE TIME IN CURBING
US DOLLAR INTEREST RATES HE NOTED THAT IN RECENT MONTHS, FIRMED UP SIGNIFICANTLY IN RESPONSE TO THE THREAT OF HIGHER IN THE UNITED STATES. THEY SEEMED LIKELY TO REMAIN HIGH FOR BEING, AND IF SO, THAT WOULD BE OF SOME HELP TO HONG KONG INFLATION,
"ON THE