XN000022-1975-02-23 — Page 2

SUNDAY, FEBRUARY 23, 1975

BUDGET ECONOMIC BACKGROUND PUBLISHED *********

UNDER THE IMPACT OF THE OIL CRISIS, HONG KONG'S GROSS DOMESTIC PRODUCT INCREASED BY AN ESTIMATED 1-1/2 PER CENT IN REAL TERMS IN 1974.

THE 1975-76 BUDGET. ECONOMIC BACKGROUND PUBLICATION WHICH APPEARS TODAY, SHOWS THAT IN THE FIRST NINE MONTHS OF 1974, THE IMPORT BILL FOR FUELS WAS MORE THAN $1,500 MILLION, COMPARED WITH A LITTLE OVER $500 MILLION FOR THE SAME PERIOD IN 1973, AND WITH LITTLE CHANGE IN THE QUANTITIES IMPORTED.

NONETHELESS, IT IS NOTED THAT EVEN WITH THE INCREASE IN PRICES, THE IMPORT BILL FOR FUELS REPRESENTED ONLY SIX PER CENT, BY VALUE, OF TOTAL VISIBLE IMPORTS.

THE REPORT GOES ON TO SAY THAT THE MAJOR IMPACT OF THE INCREASE IN OIL PRICES ON HONG KONG WAS FELT IN A SLOWING-DOWN IN THE GROWTH OF DEMAND IN PRINCIPAL EXPORT MARKETS.

THIS WAS

GA ASKAL

THE RESULT OF A HIGHER PROPORTION OF NON-OIL PRODUCING COUNTRIES" FOREIGN EXCHANGE EARNINGS BEING APPLIED TO MEETING THE INCREASED IMPORT COST OF FUELS.

THE REPORT SHOWS THAT IN THE FIRST NINE MONTHS OF 1974, DOMESTIC EXPORTS, IN QUANTITY TERMS, ACTUALLY DECLINED BY ABOUT 1-1/2 PER CENT.

MANUFACTURING EMPLOYMENT IN THE SAME PERIOD DECLINED BY ABOUT THERE HAS ALSO A LEVELLING-OFF IN WAGE RATES IN BOTH 10 PER CENT. THE MANUFACTURING AND CONTRUCTION SECTORS.

*THE FACT THAT HAGE RATES IN HONG KONG ARE FLEXIBLE IN THIS WAY HAS ALMOST CERTAINLY MEANT THAT INCREASES IN UNEMPLOYMENT HAVE BEEN RATHER SHALLER THAN WOULD HAVE OTHERWISE BEEN THE CASE,+ THE REPORT NOTES.

FURTHERMORE, THE ABSENCE OF WAGE-COST INFLATIONARY PRESSURES HAS ENHANCED HONG KONG'S ABILITY TO RESPOND QUICKLY TO INCREASES IN OVERSEAS DEMAND.

THE BUDGET ECONOMIC BACKGROUND, WHICH WILL BE ON SALE FROM TOMORROW (MONDAY) AFTERNOON AT THE GOVERNMENT PUBLICATIONS CENTRE, SAYS THE DECLINE IN DOMESTIC EXPORTS, IN QUANTITY TERMS, WAS ACCOMPANIED BY A REDUCTION IN THE QUANTITIES IMPORTED OF RAW MATERIALS, CONSUMER GOODS AND, TO SOME EXTENT, FOODSTUFFS.

/BUT WITH INCREASES