XN000022-1979-04-25 — Page 8

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WEDNESDAY, APRIL 25, 1979

TRADE DEFICIT NARROWING

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FS

THE FINANCIAL SECRETARY, THE HON. PHILIP HADDON-CAVE, TOLD THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY) THAT HONG KONG’Š TRADE DEFICIT IS NARROWING AND THAT INFLATIONARY PRESSURES ARE BEGINNING TO BE CONTAINED.

SPEAKING AT THE RESUMED DEBATE OF THE EXCHANGE FUND BILL, MR. HADDON-CAVE SAID TRADE STATISTICS FOR MARCH, WHICH WERE RELEASED TODAY, SHOWED THE GROWTH RATE OF TOTAL EXPORTS

IN MONEY TERMS IN THE FIRST QUARTER OF THIS YEAR, COMPARED WITH THAT OF 1978, AT 38 PER CENT HAD OVERTAKEN THE GROWTH RATE OF TOTAL IMPORTS AT 30 PER CENT.

THE FIGURES ALSO SHOWED THAT THE GROWTH RATE OF DOMESTIC EXPORTS AT 31 PER CENT HAD OVERTAKEN THE GROWTH RATE OF RETAINED IMPORTS AT 28 PER CENT,

+THESE FIGURES ARE EVEN BETTER THAN ESTIMATED THEY WOULD BE TWO WEEKS AGO USING INCOMPLETE DATA FOR MARCH,+ MR. HADDON-CAVE SAID, ADDING THAT THIS IS THE REVERSE OF THE SITUATION HONG KONG EXPERIENCED IN 1978 COMPARED WITH 1977.

THE FINANCIAL SECRETARY ALSO POINTED OUT THAT IN ABSOLUTE TERMS, THE DEFICIT FOR THE FIRST QUARTER OF THIS YEAR AT $3,233 MILLION WAS ONLY 18.4 PER CENT OF TOTAL IMPORTS.

COMPARED WITH THE DEFICIT FOR THE FIRST QUARTER OF LAST YEAR OF $2,725 MILLION IT WAS AS MUCH AS 20.8 PER CENT OF TOTAL

IMPORTS.

+THIS DECLINE IN THE RATIO OF THE TRADE DEFICIT TO TOTAL IMPORTS -- THE PROPORTION OF THE COST OF TOTAL IMPORTS NOT COVERED BY EARNINGS FROM EXPORTS -- IS ENCOURAGING AND REVERSES THE TREND OF THE POST-RECESSION YEARS, MR. HADDON-CAVE SAID.

+THERE IS NOW EVIDENCE THAT THE RATE AT WHICH THE TRADE DEFICIT IS WIDENING IS BEGINNING TO SLOW DOWN, BUT THIS TREND MUST BE REALLY WELL ESTABLISHED BEFORE WE CAN BE REALLY CONFIDENT THAT THE GROWTH RATE OF TOTAL FINAL DEMAND AND THE GROWTH RATE OF THE ECONOMY'S OUTPUT ARE MOVING BACK INTO BALANCE, HE ADDED.

ON INFLATIONARY PRESSURES, MR. HADDON-CAVE SAID THERE WAS FURTHER POSSIBLE EVIDENCE THAT THE ADJUSTMENT MECHANISM, SUITABLY AIDED, WAS BRINGING THE ECONOMY BACK INTO BALANCE AND THAT, THEREFORE, INFLATIONARY PRESSURES WERE BEGINNING TO BE CONTAINED.

HE POINTED OUT THAT RECENT WEEKLY STATISTICS PROVIDED BY BANKS SUGGESTED THAT THE ANNUAL ISED GROWTH RATE OF MONEY SUPPLY (NOTES AND COINS IN CIRCULATION AND DEMAND DEPOSITS AT LICENSED BANKS PLUS TIME DEPOSITS AND SAVINGS DEPOSITS) WAS AROUND 20 PER CENT WHEREAS THE FORECAST GROWTH RATE OF THE GDP IN MONEY TERMS IN 1979 WAS 16 PER CENT.

/+THIS REPRESENTS