XN000022-1981-08-28 — Page 2

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FRIDAY, AUGUST 28, 1981

CONTINUING ECONOMIC GROWTH ASSOCIATED WITH STABILITY

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ECONOMIC GROWTH IN THE FIRST HALF OF 1981 WAS ASSOCIATED WITH A FAIR DEGREE OF STABILITY.

THIS WAS SPELT OUT IN THE GOVERNMENT'S HALF-YEARLY ECONOMIC REPORT 1981, PUBLISHED TODAY, WHICH ASSESSES PRIMARILY DEVELOPMENTS IN THE FIRST HALF OF THIS YEAR.

IN ITS OVERALL VIEW OF THE ECONOMY, THE REPORT POINTS OUT THAT, IN THE FIRST HALF OF 1981, THE RELATIVE SHIFT IN THE IMPETUS TO ECONOMIC GROWTH FROM DOMESTIC EXPORTS TO DOMESTIC DEMAND, WHICH STARTED IN 1980, CONTINUED. BUT THAT THIS SHIFT, THOUGH UNDESIRABLE, WAS NOT TOO ALARMING.

THIS IS BECAUSE FIRST, THE DOMESTIC EXPORT SECTOR WAS HOLDING UP REASONABLY WELL DESPITE THE FACT THAT THE ECONOMIC CONDITIONS PREVAILING IN HONG KONG'S MAJOR MARKETS CONTINUED TO BE GENERALLY UNFAVOURABLE.

SECOND, THE GROWTH RATE OF RETAINED IMPORTS OF CONSUMER GOODS, ALTHOUGH STILL RAPID, WAS SLOWING DOWN SUGGESTING THAT THE GROWTH RATE OF PRIVATE CONSUMPTION EXPENDITURE WAS UNLIKELY TO BE EXCESSIVE.

THIRD, THE VISIBLE TRADE ACCOUNT CONTINUED TO SHOW A FAIR DEGREE OF STABILITY RELATIVE TO THE OVERALL LEVEL OF TRADE.

THE REPORT NOTES THAT WHILE ECONOMIC GROWTH CONTINUED IN THE FIRST HALF OF 1981, THERE WAS ALSO IMPROVEMENT IN THE BALANCE BETWEEN THE DEMAND FOR DOMESTIC RESOURCES AND THE SUPPLY OF THEM EVEN IN RESPECT OF PROPERTY, HENCE REDUCING THE INFLATIONARY PRESSURE INSOFAR AS IT WAS ATTRIBUTABLE TO ANY INTERNAL IMBALANCE.

APART FROM GIVING AN OVERALL VIEW, THE REPORT ALSO CONTAINS INDIVIDUAL CHAPTERS ON THE EXTERNAL SECTOR, THE FINANCIAL SECTOR, THE LABOUR SECTOR, ACTIVITY IN SELECTED SECTORS AND PRICES.

ON THE EXTERNAL SECTOR, THE REPORT EMPHASISES THAT DOMESTIC EXPORT PERFORMANCE IN THE FIRST HALF OF 1981, WITH A GROWTH RATE OF ABOUT SIX PER CENT IN REAL TERMS COMPARED WITH THE FIRST HALF OF 1980, WAS AN IMPROVEMENT OVER THE SITUATION IN THE SECOND HALF OF 1980, WHEN THE GROWTH RATE OF DOMESTIC EXPORTS SLOWED DOWN SHARPLY TO ONLY FOUR PER CENT IN REAL TERMS IN THE FOURTH QUARTER.

A FACTOR CONTRIBUTING TO THIS ENCOURAGING DEVELOPMENT WAS THAT THE US ECONOMY DID BETTER THAN EXPECTED IN THE FIRST QUARTER OF THIS YEAR.

ALSO CONTRIBUTING IS THE FACT THAT THE COST/PRICE STRUCTURE HAS BEEN ADJUSTING EFFICIENTLY,

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