XN000022-1974-10-16 — Page 13

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WEDNESDAY, OCTOBER 16, 1974

GOVERNOR CONFIDENT OF HONG KONG'S ECONOMIC FUTURE

CONTINUED GROWTH PREDICTED

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THE GOVERNOR, SIR MURRAY MACLEHOSE, TODAY SOUNDED A NOTE OF CONFIDENCE IN HONG KONG'S ECONOHY WHICH, HE PREDICTED, IS CERTAINLY EXPECTED TO CONTINUE TO GROW THIS YEAR AT A RATE OF FOUR PER CENT IN REAL TERMS.

HOST PROBABLY

IN HIS OPENING ADDRESS TO THE NEW SESSION OF THE LEGISLATIVE COUNCIL, SIR MURRAY REVIEWED THE LOCAL ECONOMY IN RELATION TO THE INTERNATIONAL ECONOMIC SITUATION, AND NOTED THAT INTERVENTION BY VARIOUS COVERNMENTS WAS 3 GREAT THAT +A RECESSION IS UNLIKELY TO ASSUME AN EXTREME FORM.+

ON INFLATION, HE SAID ONE COULD AT LEAST BE THANKFUL THAT INCOMES WERE NOT BEING EATEN AWAY BY INFLATION IN QUITE THE SAME WAY AS LAST YEAR.

HOWEVER, HE CAUTIONED THAT IT WOULD BE WRONG TO ASSUME THAT LAST YEAR'S EXTERNAL INFLATIONARY PRESSURES WOULD NO LONGER HAVE ANY EFFECT ON THE LOCAL ECONOMY OR THAT THERE WOULD NOT BE ANY FURTHER PRESSURES THIS YEAR.

COMMENTING ON EXPORTS, HE WAS CONFIDENT THAT THERE WOULD BE A FAIR HOPE THAT +A SUFFICIENTLY HEALTHY DEMAND WILL CONTINUE TO KEEP HONG KONG BUSY.+

+IF MIGHT SAY SO, SIR MURRAY SAID, HONG KONG IS SO ACCUSTOMED TO GROWTH THAT IS PHENOMENAL, THAT WE SHOULD GUARD AGAINST TOO PESSIMISTIC A REACTION TO GROWTH THAT IS, BY COMPARATIVE STANDARDS, MERELY ENVIABLE.+

IN LOOKING DISPASSIONATELY AT THE INTERNATIONAL ECONOMIC SITUATION, THE GOVERNOR NOTED THAT ONE MIGHT SEE IN IT ELEMENTS FROM WHICH HONG KONG MIGHT DRAW ENCOURAGEMENT.

+WE ARE NOT AT ALL FACING A SITUATION OF SLUMP LIKE THAT IN THE '20S OR EARLY '30S. THE LEVEL OF ECONOMIC INTERVENTION BY THE GOVERNMENTS OF THE DEVELOPED WORLD IS NOU SO GREAT, AND THE CHANNELS OF INTERNATIONAL CO-OPERATION SO EXTENSIVE, AND THE POLITICAL PRESSURES ON GOVERNMENTS TO AVOID EXCESSIVELY DEFLAT- JONARY SITUATIONS SO STRONG, THAT A RECESSION IS UNLIKELY TO ASSUME AN EXTREME FORM.+

DURING THE DOWN-TURN NOW IN EXISTENCE, HE SAID THE PURCHASING POWER OF THE POPULATIONS OF DEVELOPED COUNTRIES WAS CONTINUING AT A COMPARATIVELY HIGH LEVEL.

WHILE DEMAND FOR SOME PRODUCTS, AND IN PARTICULAR CARS AND CONSUMER DURABLES IS BEING AFFECTED, THE COURSE OF DEMAND FOR THE SORT OF THINGS THAT HONG KONG EXPORTED WAS MUCH MORE DIFFICULT TO GAUGE. MOREOVER THE DOWN-TURN WAS NOT EVENLY SPREAD THROUGHOUT THE HONG KONG MARKETS.

/+NO DOUBT