XN000022-1979-10-10 — Page 8

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WEDNESDAY, OCTOBER 10, 1979

ECONOMIC PROSPECTS PROMISING

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THE GOVERNOR, SIR MURRAY MACLEHOSE, SAID TODAY (WEDNESDAY) HE WAS NOT PESSIMISTIC ABOUT HONG KONG'S PROSPECTS IN 1980, DESPITE A POSSIBLE SLOW-DOWN IN ECONOMIC GROWTH IN OUR MAJOR MARKETS.

+A SLOW-DOWN IN ECONOMIC GROWTH IN OUR MAJOR MARKETS MAY NOT NECESSARILY MEAN THERE WILL BE A SIMILAR DROP IN SALES OF THE SORT OF THINGS HONG KONG SUPPLIES,+ SIR MURRAY SAID IN HIS OPENING ADDRESS TO THE NEW LEGISLATIVE COUNCIL SESSION.

HE ADDED, HOWEVER, THAT OUR EXPORTS OF TEXTILES AND CLOTHING WERE NOW RUNNING VERY CLOSE TO THE LIMITS IMPOSED BY QUANTITATIVE RESTRICTIONS AND SO SUCH RAPID GROWTH IN OUR DOMESTIC EXPORTS AS THIS YEAR SHOULD BE DIFFICULT IF NOT IMPOSSIBLE.+

+THIS OF COURSE MEANS THAT TRADING UP, AND THE SEARCH FOR NEW MARKETS AND NEW PRODUCTS MUST BE UNREMITTING,+ HE STRESSED.

SIR MURRAY NOTED THAT HONG KONG'S ECONOMY HAD IN MANY RESPECTS PERFORMED BETTER THAN EXPECTED. FUTURE PROSPECTS, THOUGH HARD TO FORECAST WITH ACCURACY, ARE FAR FROM BAD, HE SAID.

HE ALSO POINTED TO HONG KONG'S RE-EMERGING ROLE AS AN

ENTREPOT.

+ALTHOUGH IT IS STILL TOO EARLY TO SAY CONCLUSIVELY THAT THIS DEVELOPMENT WILL CONTINUE, IT WOULD BE PRUDENT TO ASSUME THAT THE RE-EXPORT TRADE, TOGETHER WITH THE TERTIARY SERVICES IN GENERAL AND THE FINANCIAL SERVICES SECTOR AND TOURIST SECTOR IN PARTICULAR, WILL BECOME RELATIVELY MORE IMPORTANT IN TERMS OF THE IR CONTRIBUTION TO OUR ECONOMIC PROSPERITY, HE SAID.

ON THE OUTLOOK FOR 1980, HE SAID ECONOMIC PROSPECTS ARE UNCERTAIN, PARTICULARLY AS THE ECONOMIC OUTLOOK FOR THE WORLD CONTINUES TO BE DOMINATED BY THE OIL SITUATION.

+ALTHOUGH PRESENT FORECASTS POINT TO A MUCH SLOWER RATE OF INCREASE IN OPEC PRICES IN 1980 THAN IN 1979, THERE IS NO DOUBT THAT IT WILL STILL HAVE A SUBSTANTIAL EFFECT BOTH ON WORLD INFLATION AND ON THE GROWTH RATE OF WORLD OUTPUT IN 1980.

+WHAT THIS WILL MEAN TO HONG KONG WILL DEPEND ON A HOST OF OTHER FACTORS- BUT WITH THE GROWTH RATE OF THE VOLUME OF WORLD TRADE IN MANUFACTURES BEING FORECAST TO SLOW DOWN FROM SEVEN PER CENT IN 1979 TO ABOUT FIVE-AND-A-HALF PER CENT IN 1980, IT IS CLEAR THAT THE EXTERNAL FACTORS AFFECTING HONG KONG MAY BE LESS FAVOURABLE,+ HE SAID.

/TURNING TO