XN000022-1981-02-25 — Page 13

WEDNESDAY, FEBRUARY 25, 1981

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SEVEN PER CENT GROWTH IN DOMESTIC EXPORTS FORECAST

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HONG KONG'S DOMESTIC EXPORTS TO ALL MARKETS IN 1981 IS TO GROW BY SEVEN PER CENT COMPARED WITH THE ACHIEVED GROWTH RATE IN 1980 OF 10.9 PER CENT, THE FINANCIAL SECRETARY, SIR PHILIP HADDON-CAVE SAID TODAY.

SIR PHILIP IS ALSO OPTIMISTIC ABOUT THE GROWTH RATE OF RE-EXPORTS IN 1981 AND HIS FORECAST IS FOR A GROWTH RATE OF 25 PER CENT, ONLY JUST BELOW THE AVERAGE ANNUAL GROWTH RATE IN THE PAST THREE YEARS, ALTHOUGH DOWN ON THE ACHIEVED GROWTH RATE IN 1980 OF 37.3 PER CENT.

THE FORECAST FOR THE GROWTH RATE OF TOTAL EXPORTS OF GOODS IN 1981 IS 12 PER CENT COMPARED WITH THE ACHIEVED RATE IN 1980 OF 17.7 PER CENT.

REVIEWING OUR EXPORT PROSPECTS AGAINST THE BACKGROUND OF THE WORLD ECONOMY, SIR PHILIP SAID SHARP INCREASES IN OIL PRICES, COMBINED WITH TIGHT FISCAL AND MONETARY POLICIES ADOPTED BY THE GOVERNMENTS OF 0.E.C.D. GROUP OF COUNTRIES, RESULTED IN THE OVERALL GROWTH RATE OF THESE ECONOMIES SLOWING DOWN TO ONE PER CENT IN 1980, COMPARED WITH THREE PER CENT IN 1979. THE SLOWING DOWN IN THE GROWTH RATE OF THEIR IMPORTS WAS EVEN MORE DRASTIC, TO AN ESIMATED ZERO TO MINUS ONE PER CENT IN 1980, COMPARED WITH ABOUT EIGHT PER CENT IN 1979.

+NEGATIVE GROWTH RATES WERE RECORDED BY SEVERAL O.E.C.D. COUNTRIES AS THEIR ECONOMIES MOVED INTO THE TROUGH OF THE DOWNTURN, BUT THE PROPSECTS ARE FOR A WEAK RECOVERY STARTING IN THE FIRST HALF OF THIS YEAR, HE SAID.

+THIS VIEW IS BASED ON THE ASSUMPTION THAT, FOLLOWING THE INCREASE IN POSTED PRICES LAST DECEMBER, THERE WILL BE NO SUBSTANTIAL INCREASE IN THE REAL PRICE OF OIL AND THAT GOVERNMENTS WILL PERSIST WITH FISCAL AND MONETARY POLICIES AIMED AT RESTRAINING AGGREGATE DEMAND SO AS TO REDUCE INFLATION.

SIR PHILIP EXPECTED THE ECONOMIES OF THE O.E.C.D. GROUP OF COUNTRIES AS A WHOLE TO GROW BY ONE PER CENT IN 1981, ROUGHLY THE SAME AS THAT IN 1980, BUT HE SAID THE VOLUME OF IMPORTS INTO THESE COUNTRIES WAS EXPECTED TO BE MARGINALLY LESS IN 1981 THAN

IN 1980. IN THESE CIRCUMSTANCES AND REMEMBER THAT ABOUT

75 PER CENT OF OUR DOMESTIC EXPORTS ARE SOLD IN THE MARKETS OF THE O.E.C.D. GROUP OF COUNTRIES IT IS ESSENTIAL THAT OUR COST/PRICE STRUCTURE IS ALLOWED TO ADJUST DOWNWARDS RELATIVELY SO AS TO RESTORE OUR EXTERNAL COMPETITIVENESS AS SOON AS POSSIBLE.+

AS REGARDS THE UNITED STATES WHICH TOOK 33 PER CENT OF OUR DOMESTIC EXPORTS BY VALUE IN 1980, THE FINANCIAL SECRETARY SAID THAT THERE SEEMED TO BE A CONSENSUS AMONG FORECASTERS THAT THE U.S. ECONOMY WOULD PROGRESSIVELY RECOVER, ALBEIT SLOWLY, THIS YEAR. IF THIS IS SO. THEN THE GROWTH RATE OF OUR DOMESTIC EXPORTS TO THIS MARKET SHOULD RECOVER SHORTLY, REVERSING THE TREND WHICH SAW A SLOW DOWN FROM 21 PER CENT IN THE SECOND QUARTER OF 1980 TO SEVEN PER CENT IN THE THIRD QUARTER AND TO ZERO IN THE FOURTH QUARTER.

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