XN000022-1981-10-07 — Page 4

WEDNESDAY, OCTOBER 7, 1981

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HONG KONG DOING WELL AMID WORLD RECESSION, GOVERNOR SAYS

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HONG KONG AND ITS PEOPLE ARE FAR ING REMARKABLY WELL IN THE FACE OF THE CURRENT WORLD RECESSION AND CAN LOOK FORWARD TO ANOTHER YEAR OF PROSPERITY ONCE THE WORLD ECONOMIC TIDE TURNS AROUND.

THIS FAVOURABLE OUTLOOK WAS GIVEN BY THE GOVERNOR, SIR MURRAY MACLEHOSE, IN HIS ANNUAL REVIEW TO THE OPENING OF THE NEW LEGISLATIVE COUNCIL SESSION TODAY.

WHILE THERE WERE SOME DARK PATCHES, AND MUCH DEPENDED ON THE LEVEL OF INTEREST RATES - PARTICULARLY IN THE US - THE CONSENSUS WAS, HE SAID, THAT THINGS ARE LIKELY TO BE BETTER NOT WORSE- THE RECESSION IS BOTTOMING OUT.

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THE GOVERNOR BEGAN HIS WIDE-RANGING REVIEW WITH A LOOK AT THE ECONOMIC AND FINANCIAL SITUATION.

HE POINTED OUT THAT

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* THE BUDGETED SURPLUS OF $7 800 MILLION WOULD BE SURPASSED,

THEREBY REINFORCING ITS DISINFLATIONARY EFFECT-

* TOTAL EXPENDITURE FOR THE YEAR IS NOW EXPECTED TO

EXCEED THE ESTIMATE BY NEARLY 10 PER CENT-

* THE GDP IS TO GROW BY 10 PER CENT IN REAL TERMS, MAINLY

BEING LED BY DOMESTIC DEMAND-

* DOMESTIC EXPORTS ARE EXPECTED TO INCREASE OVER 1980 BY

ABOUT SEVEN PER CENT IN REAL TERMS-

* THE RENEGOTIATION OF THE MULTI-FIBRE ARRANGEMENT WILL

CAST A BIG SHADOW ON THE FUTURE OF OUR TEXTILE AND APPAREL EXPORTS AND THE GOVERNMENT WILL VIGOROUSLY DEFEND THE INTERESTS OF OUR INDUSTRY.

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AGAINST THE BACKGROUND OF THE FAVOURABLE SITUATION, THE GOVERNOR MENTIONED THREE UNFAVOURABLE FEATURES THE GREAT IMPACT OF RECENT IMMIGRATION ON HONG KONG- SHARP RISES IN THE COST OF ACCOMMODATION AND LAND, FUELLED BY THE EASY AVAILABILITY OF CREDIT WHICH HAD CAUSED CONSIDERABLE DISTRESS AND THE WEAKENING HONG KONG DOLLAR COUPLED WITH THE RAPID GROWTH RATE OF THE MONEY SUPPLY WHICH IN TURN IS LARGELY THE RESULT OF EXCESSIVE CREDIT GROWTH.

THE GOVERNMENT'S ANSWER TO THE HOUSING PROBLEM, HE SAID, WAS TO BUILD OVER 42 000 LATS A YEAR WHICH WILL BE EITHER SOLD OR RENTED ON A BAS IS THA TOTALLY EXCLUDES LAND VALUE ON THE OPEN MARKET,

IT HAD BEEN DECIDED, HE SAID, TO REVISE THE HOME OWNERSHIP SCHEME AS SOON AS POSSIBLE SO THAT THE HIGH LAND VALUES THAT HAD BEEN INCLUDED IN THE PRICE DO NOT FRUSTRATE THE SOCIAL PURPOSE OF THE AVERAGE 5 000 UNITS A YEAR TO BE BUILT UNDER THE SCHEME.

THERE WOULD