XN000022-1976-09-06 — Page 2

MONDAY, SEPTEMBER 6, 1976.

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STRONG RECOVERY IN HONG KONG ECONOMY

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THE STRONG RECOVERY THIS YEAR IN THE HONG KONG ECONOMY IS SPELT OUT IN DETAIL IN THE HALF-YEARLY ECONOMIC REPORT WHICH WILL SHORTLY BE ON SALE. IT WILL REVIEW EVENTS IN THE FIRST HALF OF 1976.

THE REPORT POINTS OUT THAT THE UPTURN IN THE ECONOMIES OF HONG KONG'S MAJOR TRADING PARTNERS, WHICH WAS LED INITIALLY BY HEAVY STOCK BUILDING, IS NOW +WELL ESTABLISHED, WITH GROWTH IN CONSUMPTION CONFIRMED AND SIGNS OF A RECOVERY IN INVESTMENT SPENDING ALREADY RECORDED+. THIS, THE REPORT ARGUES. HAS RESULTED IN NEARLY ALL THE MAJOR ECONOMIES RECOVERING FASTER THAN EXPECTED AND, IN TURN, HAS GENERATED AN UNEXPECTEDLY RAPID RECOVERY IN THE HONG KONG ECONOMY.

THIS IS CONSISTENT WITH THE REVISED FORECAST OF THE GROWTH OF THE GROSS DOMESTIC PRODUCT IN 1976 FROM 9 PER CENT TO 16 PER CENT WHICH WAS GIVEN A FEW DAYS AGO BY THE ACTING CHIEF SECRETARY, MR. C.P. HADDON-CAVE.

THE REPORT PREDICTS THAT THE ECONOMY SHOULD APPROACH FULL CAPACITY +FASTER THAN HAD BEEN CONSIDERED LIKELY+, AND ADDS THAT THE STRONG GROWTH IN TRADE AND THE CONTINUING INCREASE IN EMPLOYMENT SHOULD BE SUSTAINED.

IT SHOWS THAT THE VALUE OF DOMESTIC EXPORTS IN THE FIRST SIX MONTHS OF THIS YEAR, AT HK$14,800 MILLION, WAS HK$4,996 MILLION OR 51 PER CENT HIGHER THAN THE CORRESPONDING SIX MONTHS IN 1975. A LARGE PROPORTION OF THIS INCREASE IN VALUE WAS ACCOUNTED FOR IN QUANTITY TERMS. THUS, THE QUANTUM

INDEX OF DOMESTIC EXPORTS FOR THE FIRST QUARTER OF 1976 WAS 40 PER CENT HIGHER THAN THE CORRESPONDING INDEX FOR THE FIRST QUARTER OF 1975, WHEREAS THE UNIT VALUE INDEX, WHICH MEASURES PRICE CHANGES, WAS ONLY 9 PER CENT HIGHER.

THE REPORT INDICATES THAT IN THE FIRST HALF OF 1976 THE VALUE OF EXPORTS TO THE UNITED STATES, THE LARGEST MARKET FOR HONG KONG'S EXPORTS, WAS 74 PER CENT HIGHER THAN IN THE FIRST HALF OF 1975. EXPORTS TO THE FEDERAL REPUBLIC OF GERMANY ALSO DID EXCEPTIONALLY WELL, THEIR VALUE BEING 41 PER CENT HIGHER IN THE FIRST HALF OF 1976 THAN THE FIRST HALF OF 1975. EVEN IN THE UNITED KINGDOM MARKET, WHERE AT THE TURN OF THE YEAR IT WAS FORECAST THAT THERE WOULD BE NO REAL GROWTH IN 1976, THE VALUE OF HONG KONG'S EXPORTS IN THE FIRST HALF OF 1976 WAS 25 PER CENT HIGHER THAN THE CORRESPONDING PERIOD A YEAR AGO AND THE QUANTITY OF EXPORTS IN THE FIRST QUARTER OF 1976 WAS 17 PER CENT HIGHER THAN IN THE FIRST QUARTER OF 1975.

+ALTHOUGH DOMESTIC EXPORTS OF CLOTHING ARE MORE SUBJECT TO TRADE RESTRICTIONS THAN OTHER PRODUCTS, THE RECOVERY IN DOMESTIC EXPORTS WAS LED BY AN UPSURGE OF DEMAND FOR CLOTHING ITEMS. THE REPORT SAYS. IT ADDS THAT THERE WERE ALSO SUBSTANTIAL INCREASES RECORDED IN THE VALUE OF DOMESTIC EXPORTS OF TRANSISTORISED RADIOS, TEXTILE YARN, TEXTILE FABRICS, AND WATCHES AND CLOCKS.

/+THE VALUE