TUESDAY, MAY 20, 1980
ON THE FINANCIAL SECTOR, THE REPORT INDICATES THAT THE GROWTH RATES OF THE MONEY SUPPLY AND OF TOTAL LOANS AND ADVANCES IN HONG KONG EXTENDED BY BANKS AND DEPOSIT-TAKING COMPANIES HAVE ACCELERATED DURING 1979, AND THAT, EVEN ALLOWING FOR SEASONAL FACTORS, THEY MIGHT HAVE CONTINUED TO DO SO IN THE EARLY MONTHS OF 1980.
IT ARGUES HOWEVER THAT IS NOT EASY TO IDENTIFY THE PRECISE IMPACT ON THE ECONOMY OF SUCH MOVEMENTS IN THE MONETARY AGGREGATES AND THAT IT IS DIFFICULT TO DETERMINE WHAT IS THE OPTIMUM GROWTH RATE OF THE MONEY SUPPLY WHEN THE STRUCTURE OF THE FINANCIAL SECTOR IN HONG KONG AT THIS POINT IN TIME IS CHANGING SO RAPIDLY. IT POINTS OUT THAT THE EXCHANGE VALUE OF THE HONG KONG DOLLAR HAS REMAINED REMARKABLY STABLE IN THE FIRST QUARTER OF 1980.
TURNING TO THE LABOUR SECTOR, THE REPORT SUGGESTS THAT A CLOSER BALANCE BETWEEN THE SUPPLY OF LABOUR AND THE DEMAND FOR IT WAS STARTING TO DEVELOP IN THE SECOND HALF OF 1979. IN SUPPORT OF THIS VIEW, IT INDICATES THAT THE UNEMPLOYMENT RATE INCREASED IN SEPTEMBER LAST YEAR THE FIRST INCREASE RECORDED SINCE ESTIMATES FIRST BECAME AVAILABLE IN SEPTEMBER 1975.
THE SUDDEN INCREASE IN THE SUPPLY OF LABOUR AS A RESULT OF THE ARRIVAL OF LEGAL AND ILLEGAL IMMIGRANTS AND OF VIETNAMESE REFUGEES IS THOUGHT TO BE ONE OF THE FACTORS CONTRIBUTING TO THIS.
IT EMPHASISES THAT, WHILE THIS HAS BEEN USEFUL IN EASING THE LABOUR SHORTAGE IN THE SHORT-TERM, THE UNDESIRABLE CONSEQUENCES ON THE ECONOMY OF SUCH ARRIVALS ARE OF MUCH GREATER SIGNIFICANCE.
ON THE SUBJECT OF PRODUCTION, THE REPORT GIVES PARTICULAR EMPHASIS TO BUILDING AND CONSTRUCTION ACTIVITY IN RELATION TO THE PROPERTY MARKET,
IT INDICATES THAT THE BUILDING AND CONSTRUCTION SECTOR WAS PROBABLY OPERATING AGAINST ITS CAPACITY LIMITS AND THAT THE GROWTH RATE OF OUTPUT IN THE NEAR FUTURE WILL, TO A LARGE EXTENT, BE DETERMINED BY THE RATE OF EXPANSION OF THE SECTOR'S CAPACITY.
IT ADDS THAT, AS THERE SHOULD NOT BE ANY UNDUE SHORTAGE OF UNSKILLED LABOUR IN 1980 AND AS THERE WILL BE ROOM FOR AN INCREASE IN PRODUCTIVITY, BUILDING AND CONSTRUCTION OUTPUT WILL PROBABLY EXPAND IN 1980 ÁT A RATE FASTER THAN THAT IN 1979.
IT SUGGESTS THAT THE PROPERTY MARKET WAS MOVING IN THE DIRECTION OF BETTER BALANCE IN THE FIRST QUARTER OF 1980 WITH THE PRICES OF BOTH COMPLETED AND UNCOMPLETED FLATS SHOWING SIGNS OF LEVELLING OFF. IT ALSO FORECASTS A SUBSTANTIAL INCREASE IN THE SUPPLY OF COMMERCIAL PROPERTIES IN 1980.
AS FOR PRICES, THE REPORT SUGGESTS THAT, ALTHOUGH THE RATE OF INFLATION ACCELERATED IN 1979 AND IN THE BEGINNING MONTHS OF 1980, THIS ACCELERATION WAS NOT DUE TO ANY DETERIORATION IN THE BALANCE BETWEEN THE DEMAND FOR DOMESTIC RESOURCES AND THE SUPPLY OF THEM.
INSTEAD, SINCE THE SECOND HALF OF 1979, A CLOSER BALANCE HAS STARTED TO DEVELOP AND THE REPORT FORECASTS THAT THIS IS LIKELY TO CONTINUE IN 1980.
/HOWEVER, IT
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