XN000022-1982-08-27 — Page 2

FRIDAY, AUGUST 27, 1982

ECONOMY AFFECTED BY WORLD RECESSION

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THE WORLD ECONOMIC RECESSION HAS BEEN EXERTING AN UNFAVOURABLE INFLUENCE ON THE HONG KONG ECONOMY, TO THE EXTENT THAT THE EIGHT PER CENT GROWTH RATE FOR THE GROSS DOMESTIC PRODUCT FORECAST AT THE BEGINNING OF THE YEAR NOW LOOKS TOO HIGH, IT IS STATED IN THE HALF-YEARLY ECONOMIC REPORT FOR 1982 PUBLISHED BY THE GOVERNMENT TODAY.

THE REPORT REVIEWS PRIMARILY DEVELOPMENTS IN THE FIRST HALF OF THIS YEAR.

THE EXPORT SECTOR WAS THE MOST AFFECTED, WITH DOMESTIC EXPORTS IN THE FIRST HALF OF THIS YEAR BEING TWO PER CENT LESS IN REAL TERMS THAN IN THE FIRST HALF OF 1981, THE REPORT STATES.

THE REPORT POINTS OUT, HOWEVER, THAT THE EXPORT SECTOR APPEARS WELL POISED TO BENEFIT FROM ANY RECOVERY THAT MAY OCCUR IN THE ECONOMIES OF HONG KONG'S MAIN MARKETS. THIS IS BECAUSE THE PRICES OF HONG KONG'S MANUFACTURED PRODUCTS HAVE REMAINED RELATIVELY STABLE IN RECENT MONTHS AS THE PRESSURE FROM PROPERTY PRICES AND RENTALS, INTEREST COSTS AND IMPORT PRICES HAVE EASED FURTHER.

COMMENTING ON THE ECONOMIC SITUATION AS REVIEWED IN THE REPORT, A GOVERNMENT SPOKESMAN POINTED OUT THAT THE HONG KONG ECONOMY IS HOLDING UP EXTREMELY WELL CONSIDERING THAT THE WORLD IS UNDERGOING THE WORST RECESSION SINCE THE 1930S. HE SAID THAT THE ECONOMY IS STILL GROWING, WITH THE GROWTH IMPETUS COMING FROM DOMESTIC DEMAND AND ACTIVITY IN THE TERTIARY SERVICES SECTORS. THE UNEMPLOYMENT RATE HAS ONLY INCREASED MARGINALLY TO 3.5 PER CENT IN MARCH THIS YEAR AND THE RATE OF INFLATION IS DEFINITELY SLOWING DOWN, IN TERMS OF CONSUMER PRICES, FROM 15 PER CENT LAST YEAR TO 13 PER CENT IN THE FIRST QUARTER OF THIS YEAR AND 11 PER CENT IN THE SECOND QUARTER.

APART FROM GIVING AN OVERALL VIEW, THE REPORT 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 POINTS OUT THAT THE DECLINE IN DOMESTIC EXPORTS BY TWO PER CENT IN REAL TERMS IN THE FIRST HALF WAS DUE TO THE WEAK DEMAND FROM HONG KONG'S MAIN MARKETS. AS THERE ARE STILL NO CONVINCING INDICATIONS OF RECOVERY IN THE ECONOMIES OF THESE MARKETS, A MAJOR IMPROVEMENT IN EXPORT PERFORMANCE IN THE NEAR FUTURE APPEARS UNLIKELY.

THE RELATIVELY LOW LEVEL OF RETAINED IMPORTS OF RAW MATERIALS AND SEMI-MANUFACTURES INTO HONG KONG IN THE FIRST HALF OF THIS YEAR IS CONSISTENT WITH THIS VIEW.

THE REPORT FURTHER POINTS OUT THAT IMPORTS IN THE FIRST HALF OF 1982 WERE IN REAL TERMS LESS THAN IN THE FIRST HALF OF LAST YEAR AND THIS WAS TRUE FOR BOTH IMPORTS RETAINED IN HONG KONG AND IMPORTS SUBSEQUENTLY RE-EXPORTED. AS A CONSEQUENCE, THE VISIBLE TRADE +GAP+ IN THE FIRST HALF OF 1982 AT 14 PER CENT WAS NARROWER THAN IN THE SAME PERIOD OF 1981.

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