XN000022-1979-02-28 — Page 14

WEDNESDAY, FEBRUARY 28, 1979

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MAINTAINING TREND GROWTH RATE OF GDP

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A HIGH GROWTH RATE OF THE LABOUR FORCE WILL RAISE THE GROWTH RATE OF THE PRODUCTIVE POTENTIAL OF THE ECONOMY AND COULD HELP MAINTAIN IN THE FORECAST PERIOD 1980-82, THE TREND GROWTH RATE OF G.D.P. EXPERIENCED SO FAR IN THE 1970S OF ABOUT NINE PER CENT, THE FINANCIAL SECRETARY SAID TODAY.

THIS WAS BECAUSE NEITHER DEVELOPMENTS RELATING TO CHINA NOR THE PRESENT HIGH RATE OF NET IMMIGRATION SEEMED LIKELY TO AFFECT THE GROWTH RATE OF PRODUCTIVITY IN THE FORECAST PERIOD.

HOWEVER THE FINANCIAL SECRETARY DID NOT RATE +VERY HIGHLY+ THE CHANCES OF MAINTAINING THE PRESENT RATE OF IMPROVEMENT IN REAL LIVING STANDARDS OVER THE NEXT FEW YEARS.

HE SAID THIS WAS BECAUSE OF THE MULTIPLICITY OF PRESSURES CAUSED BY FURTHER INCREASES IN THE POPULATION SUCH AS HONG KONG EXPERIENCED IN 1978, OF 3.4 PER CENT, THE HIGHEST INCREASE SINCE 1962.

ANTI-INFLATIONARY POLICIES OF OVERSEAS GOVTS

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HONG KONG IS FACING A SITUATION IN WHICH THE GROWTH RATE OF WORLD TRADE IN MANUFACTURES WILL BE NO MORE THAN SIX PER CENT COMPARED WITH THE TREND GROWTH RATE OF NINE PER CENT FROM THE MID-1960'S TO THE MID-1970'S, THE FINANCIAL SECRETARY SAID TODAY (WEDNESDAY).

THIS CAME, HE SAID, AT A TIME WHEN WE SHALL BE SEVERELY RESTRICTED IN THE EXTENT TO WHICH WE ARE ALLOWED TO TAKE ADVANTAGE OF SUCH GROWTH AS THERE IS.+

HE NOTED THAT THE FEAR OF ACCELERATING INFLATION WAS CAUSING THE UNITED STATES TO ADOPT LESS EXPANSIONARY POLICIES AND THAT THERE WAS RELATIVELY LITTLE EVIDENCE THAT UNEMPLOYMENT LEVELS IN O.E.C.D. COUNTRIES WOULD BE REDUCED.

THESE ADDED SUPPORT TO THE VIEW THAT THERE WAS LITTLE LIKELIHOOD THAT THE STRENGTH OF PROTECTIONIST SENTIMENTS WOULD LESSEN, HE SAID.

OIL PRICE INCREASES SCHEDULED BY O.P.E.C. AND ANY OTHER INCREASES OVER AND ABOVE THESE MADE THE ADOPTION OF REFLATIONARY POLICIES +EVEN LESS LIKELY, THE FINANCIAL SECRETARY SAID.

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