XN000022-1975-02-26 — Page 17

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WEDNESDAY, FEBRUARY 26, 1975.

CONSIDERABLE POTENTIAL FOR ECONOMIC GROWTH IN 1976

* * * * * *

HONG KONG'S OVERALL ECONOMY IS LIKELY TO PICK UP SPEED AGAIN IN 1976/77 FOLLOWING A VIRTUAL STANDSTILL IN 1974 AND 1975.

ACCORDING TO THE FINANCIAL SECRETARY, THE HON. PHILIP HADDON- CAVE, THE POTENTIAL FOR ECONOMIC GROWTH OVER THE THREE-YEAR FORECAST PERIOD 1976/77 TO 1978/79 APPEAR TO BE VERY CONSIDERABLE, AND RAPID GROWTH OVER THESE YEARS COULD COMPENSATE FOR THE LACK OF GROWTH LAST YEAR AND THIS YEAR.

REVIEWING HONG KONG'S ECONOMIC PROSPECTS IN THE LONGER TERM, THE FINANCIAL SECRETARY SAID HE ADHERED TO HIS BELIEF THAT A SEVEN PER CENT REAL GROWTH RATE FOR THE ECONOMY WAS A REALISTIC ASSUMPTION FOR BUDGETARY PLANNING PURPOSES.

+BUT TO ALLOW A LITTLE TIME FOR THE GROWTH RATE TO PICK UP I AM ASSUMING FIVE PER CENT IN 1976 AND SEVEN PER CENT THEREAFTER,+ HE SAID.

MR. HADDON-CAVE THOUGHT THAT A RAPID GROWTH RATE DURING THE FORECAST YEARS WOULD BE AN UNDULY OPTIMISTIC BASIS FOR BUILDING A REVENUE AND EXPENDITURE FORECAST, ALTHOUGH IT WAS POSSIBLE THAT SUCH AN ABOVE AVERAGE RATE OF GROWTH WOULD TAKE PLACE.

MORE REALISTICALLY, HE SAID IT MIGHT WELL BE QUITE DIFFICULT FOR HONG KONG TO MAINTAIN THE SEVEN TO EIGHT PER CENT REAL GROWTH RATES ACHIEVED IN THE PERIOD 1966-73 AS HONG KONG NOW FACED STIFFER COMPETITION IN MANY OF ITS TRADITIONAL EXPORT LINES AND MARKETS.

+NOR CAN WE DISCOUNT THE POSSIBILITY THAT THE GROWTH IN, WORLD TRADE WILL NOT REGAIN THE HISTORICALLY VERY HIGH PRE-1974 RATES.+

YET THE FINANCIAL SECRETARY WAS CONFIDENT THAT THE ECONOMY WOULD BE IN A POSITION QUICKLY TO TAKE ADVANTAGE OF WHATEVER EXPANSION OF WORLD TRADE WHEN IT OCCURRED.

VIEWING THE ECONOMIC PROSPECTS IN THE SHORT TERM, MR. HADDON-CAVE FORECAST THAT THE GROWTH RATE OF THE GROSS DOMESTIC PRODUCT IN REAL TERMS IN 1975 WOULD, IN EFFECT, AGAIN BE ŽERO LIKE IN THE PREVIOUS YEAR.

+IT COULD EVEN BE NEGATIVE TO A SMALL EXTENT, * HE SAID STRESSING THIS FORECAST WAS 'BASED ON A WHOLE RANGE OF ASSUMPTIONS, INCLUDING THE VIEW THAT OUR EXPORTS WILL FALL, IN QUANTITY TERMS, BY UP TO FIVE PER CENT AND IMPORTS BY ABOUT THE SAME AMOUNT.

THE FINANCIAL SECRETARY FORECAST THAT THE VISIBLE TRADE DEFICIT WOULD FALL FROM LAST YEAR'S RECORD $4,100 MILLION TO UNDER $3,000 MILLION, IN MONEY TERMS, TO A LITTLE BELOW THE LEVEL FOR 1973.

THE MONEY