XN000022-1973-03-28 — Page 21

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Wednesday, March 28, 1973

ECONOMY IS FUNDAMENTALLY HEALTHY

Inflation No Serious Threat

The Financial Secretary, the Hon. C.P. Haddon-Cave, today expressed confidence in the health of the economy, which he described as "fundamentally

sound."

He was speaking at the resumed debate on the budget in today's

Legislative Council meeting.

He noted that virtually all members viewed the economy with

"varying degrees of foreboding."

They had referred to inflation generally, to land prices and rents, to the effect of changes in the exchange rate of the Hong Kong dollar and

to the stock exchanges,

But he said "they do not seriously affect the fundamental health of our economy or require fundamental changes to our policies.

He admitted that consumer price index had increased by 31⁄2 per

cent in 1971 and five per cent in 1972.

Export prices rose by between six and 7 per cent, and import prices by two per cent and 41⁄2 per cent respectively in each of these two years.

But, he said, Hong Kong's economy was still growing rapidly by any reasonable standards, and real incomes measured in terms of G.D.P. rose

by as much as eight per cent in 1972.

The Financial Secretary said the Hong Kong economy was externally oriented and "we must necessarily be affected by developments in the economies of our trading partners."

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