XN000022-1981-02-25 — Page 3

WEDNESDAY, FEBRUARY 25, 1981

GDP TO GROW BY 8 PER CENT AT CONSTANT PRICES

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THE FINANCIAL SECRETARY, THE HON SIR PHILIP HADDON-CAVE TODAY FORECAST THAT THE GROSS DOMESTIC PRODUCT IN 1981 WILL GROW BY 8 PER CENT AT CONSTANT PRICES COMPARED WITH THE ACHIEVED GROWTH RATE IN 1980 OF 9 PER CENT.

THIS FORECAST IMPLIES THAT AT CONSTANT (1973) PRICES, TOTAL EXPENDITURE ON THE GDP WILL BE ABOUT $65 300 MILLION. ASSUMING THAT THE GROWTH RATE OF THE POPULATION WILL BE 2.4 PER CENT, THE GROWTH RATE OF GDP PER CAPITA IN 1981 WILL BE 5.5 PER CENT WHICH IS THE SAME, FOR ALL INTENTS AND PURPOSES, AS THE ACHIEVED GROWTH RATE IN 1980 OF 5.4 PER CENT, SIR PHILIP SAID.

AT CURRENT PRICES, THE GROWTH RATE OF GDP IN MONEY TERMS IN 1981 IS 19 PER CENT COMPARED WITH THE ACHIEVED GROWTH RATE IN 1980 OF 23.2 PER CENT, TOTAL EXPENDITURE ON THE GDP IN 1981 WILL BE ABOUT $126 400 MILLION. IN PER CAPITA TERMS, GDP AT CURRENT PRICES WILL BE ABOUT $24 400 REPRESENTING A GROWTH RATE OF 16 PER CENT, COMPARED WITH THE ACHIEVED GROWTH RATE IN 1980 OF 19.1 PER CENT.

SIR PHILIP ALSO FORECAST A 12 PER CENT RATE OF INCREASE IN CONSUMER PRICES IN HONG KONG IN 1981, REPRESENTING A SLOW DOWN FROM THE ACTUAL RATE OF INCREASE RECORDED IN 1980 OF 15.5 PER CENT. THIS FORECAST WAS MADE AGAINST THE BACKGROUND THAT THE RATE OF INFLATION IN THE WORLD ECONOMY WILL SLOW DOWN IN 1981. THE RATE OF INCREASE IN CONSUMER PRICES IN THE O.E.C.D. GROUP OF COUNTRIES, FOR EXAMPLE, IS EXPECTED TO SLOW DOWN FROM 13 PER CENT IN 1980 TO ABOUT 10 PER CENT IN 1981.

HOWEVER, HE SAID MUCH STILL DEPENDED UPON THE FUTURE COURSE OF WORLD OIL PRICES. +RETAINED IMPORTS OF OIL PRODUCTS NOW REPRESENT 9 PER CENT OF TOTAL RETAINED IMPORTS BY VALUE, COMPARED WITH 7 PER CENT IN 1976 AND ONLY 2 PER CENT IN 1973- AND, GIVEN THAT DEMAND IS FAIRLY PRICE INELASTIC IN THE SHORT TERM, THE IMPACT OF INCREASES IN THE PRICES OF THESE PRODUCTS ON OUR BALANCE OF TRADE AND THE INTERNAL PRICE LEVEL HAS BECOME MUCH MORE SIGNIFICANT.+

SIR PHILIP ALSO EXPECTED THE RATE OF INCREASE IN THE GENERAL PRICE LEVEL THE GDP DEFLATOR - TO SLOW DOWN AND HIS FORECAST IS THAT IT WILL INCREASE IN 1981 BY 10 PER CENT COMPARED WITH THE ACTUAL RATE OF INCREASE RECORDED IN 1980 OF 13 PER CENT.

THE FOLLOWING ARE THE FORECASTS OF EXPENDITURE ON GDP BY COMPONENTS IN 1981 AT CONSTANT (1973) PRICES:

(A) PRIVATE CONSUMPTION EXPENDITURE SIR PHILIP EXPECTED

LESS BUOYANT EXPORT EARNINGS IN THE SECOND HALF OF 1980 AND PROBABLY IN THE FIRST HALF OF 1981 TO EXERT A DAMPENING EFFECT. HIS FORECAST FOR THE GROWTH RATE OF THIS COMPONENT IN 1981 IS EIGHT PER CENT AGAINST THE ACHIEVED RATE IN 1980 OF 8.8 PER CENT.

(B)

GOVERNMENT CONSUMPTION EXPENDITURE: TO GROW BY 15 PER CENT COMPARED WITH THE ACHIEVED GROWTH RATE IN 1980 OF 7.9 PER CENT.

/(c) GROSS