XN000022-1974-10-16 — Page 79

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Wednesday, October 16, 1974

channels, interest rates declining from their present levels,

and generally speaking an easing of current constrictions on

investment and demand.

Meanwhile, as I have said a period of adjustment is

inevitable. But it is exceedingly difficult to forecast how

Hong Kong will fare in this period of adjustment because so

many factors are new and relatively unknown and virtually all

are outside our control. Certainly Hong Kong cannot hope to

rate

avoid some of the consequences of a slowing down in world trade.

The rat of growth of the volume of our exports has levelled

off in recent months. We know that manufacturing employment

here, and in many cases take-home pay, has been falling; and even allowing for normal seasonal variations in trade it is

not conceivable that the figure for the growth of exports during this calendar year will be as high as the corresponding

figure I quoted for the twelve months to June.

It is unlikely that 1973 levels of employment will be regained this year. One can at least be thankful that incomes are not eaten away as last year, but I am afraid it would be wrong to assume that the external inflationary pressures of the last year have" finished working their way through our economy, or that there will not be further ones this year.

If we look dispassionately at the international economic situation we may see in it elements from which Hong Kong may draw encouragement. We are not at all facing a situation of slump like that in the '20s or early 130s. The level of economic intervention by the governments of the developed world is now so great, and the channels of international co- operation so extensive, and the political pressures on Governments to avoid excessively deflationary situations so strong, that a

/recession is .............

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