XN000022-1979-09-14 — Page 2

HONG KONG WITHIN SIGHT OF ECONOMIC STABILITY

REVISED FORECAST OF GDP- 12 PER CENT ******

HONG KONG IS WITHIN SIGHT OF ECONOMIC STABILITY, THE FINANCIAL SECRETARY, MR. PHILIP HADDON-CAVE, SAID TODAY (FRIDAY) AT A DINNER AT THE FOREIGN CORRESPONDENTS' CLUB.

MR. HADDON-CAVE ADDED THAT, FAR FROM HAVING HAD TO SACRIFICE GROWTH FOR STABILITY, THE GROWTH RATE OF THE ECONOMY HAS ACTUALLY ACCELERATED FROM 10 PER CENT IN 1978 TO A PROBABLE 12 PER CENT IN 1979, ALTHOUGH THE 6.4 PER CENT INCREASE IN POPULATION IN 1979 HAS MEANT THAT GROSS DOMESTIC PRODUCT (GDP) PER HEAD WILL BE LESS THAN WOULD OTHERWISE BE THE CASE.

THE REVISED GROWTH RATE OF 12 PER CENT FOR HONG KONG'S GDP IN 1979 IS SIGNIFICANTLY HIGHER THAN THE BUDGET SPEECH FORECAST OF 7 PER CENT.

MR. HADDON-CAVE GAVE FIVE REASONS WHY THE REVISED FORECAST DIFFERS CONSIDERABLY FROM THE BUDGET FORECAST.

THEY WERE FIRST, THERE HAD BEEN AN ALMOST DRAMATIC UPSURGE IN DEMAND FOR HONG KONG'S DOMESTIC EXPORTS- SECONDLY,

SECONDLY. THERE HAD BEEN HIGHER THAN EXPECTED INVESTMENT IN PLANT AND MACHINERY- THIRDLY, HONG KONG'S RE-EXPORT TRADE HAD CONTINUED TO SURGE. FOURTHLY, THERE HAD BEEN AN UNEXPECTED ACCELERATION OF WORLD PRICES- AND FIFTHLY, THE BUDGET FORECAST HAD NOT ALLOWED SUFFICIENTLY FOR THE RECENT POPULATION INCREASE.

THE REVISED FORECAST FOR THE GROWTH RATES OF THE GDP COMPONENTS IN 1979 ARE 11 PER CENT FOR PRIVATE CONSUMPTION EXPENDITURE, COMPARED WITH NINE PER CENT IN THE BUDGET SPEECH FORECAST AND 17 PER CENT ACHIEVED IN 1978- 12 PER CENT FOR GOVERNMENT CONSUMPTION EXPENDITURE, COMPARED WITH NINE PER CENT IN THE BUDGET SPEECH FORECAST AND 14 PER CENT ACHIEVED IN 1978- 15 PER CENT FOR GROSS DOMESTIC FIXED CAPITAL FORMATION, COMPARED WITH NINE PER CENT IN THE BUDGET SPEECH FORECAST AND 19 PER CENT ACHIEVED IN 1978- 16 PER CENT FOR EXPORTS OF GOODS, COMPARED WITH EIGHT PER CENT IN THE BUDGET SPEECH FORECAST AND 14 PER CENT ACHIEVED IN 1978- AND 15 PER CENT FOR IMPORTS OF GOODS, COMPARED WITH 10 PER CENT IN THE BUDGET SPEECH FORECAST AND 22 PER CENT ACHIEVED IN 1978.

MR. HADDON-CAVE DREW PARTICULAR ATTENTION TO THE FACT THAT THE REVISED FORECAST FOR THE GROWTH RATE OF INVESTMENT IN PLANT AND MACHINERY IS 20 PER CENT, COMPARED WITH EIGHT PER CENT IN THE BUDGET SPEECH FORECAST AND 19 PER CENT ACHIEVED IN 1978. BUT THE REVISED FORECAST FOR THE GROWTH RATE OF INVESTMENT IN BUILDING AND CONSTRUCTION, REMAINS UNCHANGED FROM THE BUDGET SPEECH FORECAST AT 10 PER CENT. THE GROWTH RATE ACHIEVED IN 1978 WAS 15 PER CENT.

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