XN000022-1979-10-10 — Page 10

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WEDNESDAY OCTOBER 10, 1979

+THIS IS A HIGHLY RESPONSIBLE COMMUNITY ABOUT IMPORTANT MATTERS, AND THIS IS A SITUATION WHICH CALLS FOR RESPONSIBILITY BY ALL, HE SAID.

SIR MURRAY NOTED THAT ALL THE EVIDENCE NOW INDICATED THAT IN 1979 THE TENDENCY WAS FOR ADJUSTMENT IN THE RIGHT DIRECTION AND LISTED THE FOLLOWING WELCOMING TRENDS.

*

GROWTH RATE OF DEMAND IS MORE IN LINE WITH THE GROWTH RATE OF THE ECONOMY'S ABILITY TO PRODUCE AND SO THE GROWTH RATE OF IMPORTS IS SLOWING DOWN-

* DOMESTIC EXPORTS ARE GROWING QUICKLY — OUR EXPORTERS HAVE

DONE A MAGNIFICENT JOB-- SO THAT THE GROWTH RATE OF TOTAL EXPORTS IS NOW FASTER THAN THE GROWTH RATE OF IMPORTS, REVERSING THE WORRYING TREND IN 1978-

OUR VISIBLE TRADE DEFICIT HAS NARROWED AND THIS, TOGETHER WITH HIGHER INTEREST RATES, IS HELPING TO STABILISE THE EXCHANGE RATE OF THE HONG KONG DOLLAR-

* THERE HAS BEEN A MOST WELCOME SHIFT IN THE RE-DISTRIBUTION

OF RESOURCES IN FAVOUR OF THE MANUFACTURING SECTOR-

* THE MONEY SUPPLY IS NOW GROWING AT A RATE ACTUALLY

LOWER THAN THE GROWTH RATE OF GROSS DOMESTIC PRODUCT AT CURRENT PRICES AND

* THE GROWTH RATE OF BANK ADVANCES HAS SLOWED DOWN,

THOUGH NOT YET SUFFICIENTLY.

SIR MURRAY ALSO NOTED THAT VARIOUS MEASURES WERE TAKEN IN THIS YEAR'S BUDGET TO HELP SLOW DOWN THE GROWTH RATE OF OVERALL DEMAND TO A LEVEL MORE CONSISTENT WITH THE GROWTH OF OUR ECONOMY'S OUTPUT.

THESE INCLUDED A SLOW DOWN IN THE GROWTH RATE OF GOVERNMENT SPENDING PARTICULARLY WITH A VIEW TO EASING PRESSURES ON THE BUILDING AND CONSTRUCTION INDUSTRY, STEPS WERE ALSO TAKEN TO INFLUENCE THE MONETARY AGGREGATES SO THAT THEY GREW IN A MANNER CONSISTENT WITH OUR ECONOMIC CIRCUMSTANCES. THEY INCLUDED MEASURES TO REDUCE THE AMOUNT OF GOVERNMENT BALANCES THAT COULD BE ON-LENT BY BANKS POWER TO ALTER MINIMUM LIQUIDITY RATIOS AND THE RAISING OF INTEREST RATES.

BUT, HE SAID, TO REDUCE OVERALL DEMAND IN AN ECONOMY LIKE HONG KONG'S IN WHICH THE SIZE OF THE PUBLIC SECTOR WAS RELATIVELY SMALL, +CLEARLY IT IS THE ACTION OF THE PRIVATE SECTOR THAT IS IMPORTANT.+

NEVERTHELESS A CONTRIBUTION BY THE PUBLIC SECTOR WAS ESSENTIAL AND ACCORDINGLY, THE GROWTH RATE OF GOVERNMENT EXPENDITURE WAS REDUCED FROM 25 PER CENT IN REAL TERMS IN THE PERIOD 1977/78

1978/79 TO 7.5 PER CENT IN THIS YEAR'S ESTIMATES, HE SAID.

+THIS DECISION WAS DEVISED SO AS TO LEAVE RELATIVELY UNTOUCHED THE PLANS LAID DOWN IN WHITE PAPERS FOR THE EXPANSION OF EDUCATION, MEDICAL AND HEALTH SERVICES, AND SOCIAL SERVICES.

J

*BUT IT BORE DOWN HEAVILY ON PUBLIC WORKS BECAUSE OF THIS VERY RAPID GROWTH, COST INFLATION, AND THE OVER EXTENSION OF THE BUILDING INDUSTRY, HE ADDED.

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