XN000022-1979-08-12 — Page 3

SUNDAY, AUGUST 12, 1979

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FURTHERMORE, THE GROWTH RATE OF IMPORTS, AFTER DISCOUNTING FOR PRICE INCREASES, WAS ABOUT 20 PER CENT HIGHER

IN THE FIRST HALF OF 1979 COMPARED WITH THE FIRST HALF OF 1978.

THIS REPRESENTED A MARKED DECELERATION COMPARED WITH GROWTH RATES IN REAL TERMS OF 27 PER CENT AND 29 PER CENT

THIRD AND FOURTH QUARTERS OF LAST YEAR.

RESPECTIVELY FOR THE

ON THE RE-EXPORT TRADE, THE REPORT SUGGESTS A RE-EMERGING ROLE OF HONG KONG AS AN ENTREPOT. THE VALUE OF RE-EXPORTS IN THE FIRST HALF OF 1979 WAS 55 PER CENT HIGHER THAN IN THE FIRST HALF OF 1978.

THE REPORT GIVES A DETAILED ANALYSIS ON THE GROWTH RATE OF THE MONEY SUPPLY AND OF BANK LENDING AND ARGUES THAT THE GROWTH RATE OF THE MONEY SUPPLY, HOWEVER DEFINED, HAS SHOWN SIGNS OF SLOWING DOWN.

THE GROWTH RATE OF LOANS TO FINANCE ECONOMIC ACTIVITIES, THAT IS, BANK LOANS CONSOLIDATED WITH LOANS EXTENDED BY DEPOSIT-TAKING COMPANIES, WAS ALSO SLOWING DOWN.

ON THE HONG KONG DOLLAR, THE REPORT EMPHASISES THAT THE TRADE WEIGHTED EXCHANGE RATE INDEX HAS REMAINED RELATIVELY STABLE DURING THE FIRST HALF OF THIS YEAR COMPARED WITH THE MOVEMENTS DURING 1978.

THE REPORT SUGGESTS THAT THE DEPRECIATION OF THE HONG KONG DOLLAR IN THE FIRST HALF OF THE YEAR WAS MAINLY DUE TO THE FAIRLY LARGE VISIBLE TRADE DEFICIT.

ARBITRAGE TRANSACTIONS BETWEEN THE GOLD MARKETS IN HONG KONG AND OVERSEAS ALSO HAD A MARKED INFLUENCE FROM TIME TO TIME.

ON PRICES, THE REPORT SHOWS THE CONSUMER PRICE INDEXES INCREASING AT A RATE BETWEEN NINE PER CENT AND 10 PER CENT IN THE FIRST HALF OF THIS YEAR, REPRESENTING, AS EXPECTED BY THE FINANCIAL SECRETARY IN HIS BUDGET SPEECH THIS YEAR, AN ACCELERATION FROM THE SIX PER CENT INCREASE IN 1978.

THE REPORT POINTS OUT THAT THE HIGH RATE OF INCREASE IN PRICES WAS THE RESULT OF EXCESS DEMAND ON DOMESTIC FACTORS OF PRODUCTION AND ON GOODS AND SERVICES PRODUCED IN THE ECONOMY AIDED BY THE DELAYED EFFECT OF THE DEPRECIATION OF THE HONG KONG DOLLAR, AND BY MOVEMENTS IN WORLD PRICES WHICH HAD, IN THE FIRST HALF OF THIS YEAR, BEGUN TO ACCELERATE.

OTHER HIGHLIGHTS OF THE REPORT INCLUDE:

* A CONTINUING STRONG DEMAND FOR LABOUR-

*

A RAPID INCREASE IN WAGE RATES DURING THE FIRST HALF OF THE YEAR-

* A BETTER BALANCE DEVELOPING BETWEEN THE SUPPLY OF

AND THE DEMAND FOR PRIVATE SECTOR PROPERTY, ALTHOUGH EXCESS DEMAND STILL PERSISTED IN LARGE RESIDENTIAL FLATS-

▲ POSSIBLE