XN000022-1982-11-25 — Page 3

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THURSDAY, NOVEMBER 25, 1982

AS THE YEAR-ON-YEAR GROWTH RATES OF TOTAL EXPORTS (DOMESTIC EXPORTS PLUS RE-EXPORTS) AND OF IMPORTS HAVE BOTH SLOWED DOWN TO ONLY ONE PER CENT IN VALUE TERMS IN THE THIRD QUARTER, THE VISIBLE TRADE GAP, AT SIX PER CENT, WAS ROUGHLY THE SAME AS THAT IN THE THIRD QUARTER OF 1981. BUT THERE WAS A SLIGHT IMPROVEMENT TO 11.2 PER CENT IN THE FIRST NINE MONTHS OF 1982 WHEN COMPARED WITH 12.4 PER CENT IN THE SAME PERIOD OF 1981.

ON THE FINANCIAL SECTOR, THE REPORT SHOWS THAT THE GROWTH RATE OF THE MONEY SUPPLY ACCELERATED SOMEWHAT IN THE THIRD QUARTER, BUT THE GROWTH RATE OF CREDIT SLOWED DOWN.

THE MONETARY STATISTICS CONTINUED TO BE INFLUENCED BY A NUMBER OF SPECIAL FACTORS,

THERE WAS A MARKED EXPANSION IN FOREIGN CURRENCY DEPOSITS (VERY LARGELY IN US DOLLARS) WITH BANKS AND DEPOSIT-TAKING COMPANIES, PARTLY AS A CONTINUING RESULT OF THE EXEMPTION AS FROM FEBRUARY 25, 1982 OF SUCH DEPOSITS FROM INTEREST WITHHOLDING TAX, AND PARTLY AS A RESULT OF THE REVALUATION EFFECT FROM THE RECENT DEPRECIATION OF THE HONG KONG DOLLAR AGAINST THE US DOLLAR.

AT THE SAME TIME, THERE WAS A FURTHER SHIFT OF DEPOSITS FROM DEPOSIT-TAKING COMPANIES TO BANKS DURING THE THIRD QUARTER AS REGISTERED DEPOSIT-TAKING COMPANIES CONTINUED TO REDUCE THE IR SHORT-TERM DEPOSIT BASE, IN PURSUANCE OF THE REQUIREMENTS OF THE DEPOSIT-TAKING COMPANIES ORDINANCE AS AMENDED IN 1981.

THE REPORT ALSO INDICATES THAT LOCAL INTEREST RATES DECLINED IN THE THIRD QUARTER AS THE GROWTH RATE OF THE DEMAND FOR CREDIT IN HONG KONG SLOWED DOWN AND AS INTEREST RATES IN MAJOR OVERSEAS ECONOMIES FELL. BUT THE DECLINE WAS NOT CONTINUOUS INTEREST RATES HARDENED AT THE END OF SEPTEMBER WHEN THE EXCHANGE RATE OF THE HONG KONG DOLLAR CAME UNDER PRESSURE. THE EXCHANGE VALUE OF THE HONG KONG DOLLAR REMAINED FAIRLY STRONG FOR MOST OF THE YEAR, PROBABLY HELPED BY THE NARROWING OF THE VISIBLE TRADE GAP. HOWEVER, IT WEAKENED TOWARDS THE END OF SEPTEMBER WHEN THE MARKET WAS AFFECTED BY THE WORLDWIDE STRENGTHENING OF THE US DOLLAR AND BY ANXIETIES ABOUT THE FUTURE OF HONG KONG. THIS WEAKNESS CONTINUED INTO OCTOBER.

ON THE LABOUR SECTOR, THE REPORT SAYS THAT THE GROWTH RATE OF THE SUPPLY OF LABOUR SLOWED DOWN. THERE WAS AT THE SAME TIME A SLOWING DOWN IN THE GROWTH RATE OF THE DEMAND FOR LABOUR, PARTICULARLY BY THE MANUFACTURING SECTOR. THE NET DECREASE OF FOUR PER CENT IN EMPLOYMENT IN THE MANUFACTURING SECTOR OVER THE PAST YEAR WAS, HOWEVER, MORE THAN COMPENSATED FOR BY THE INCREASE IN EMPLOYMENT IN THE TERTIARY SERVICES SECTORS.

THE REPORT FURTHER OBSERVES THAT AS THE EFFECT OF IMMIGRATION ON THE LABOUR FORCE DIMINISHED AND THE RATE OF INFLATION EASED WAGE RATES IN THE MANUFACTURING SECTOR SHOWED AN INCREASE IN REAL TERMS DURING THE SIX MONTHS ENDING MARCH 19821 BUT, GIVEN THE POOR EXPORT PERFORMANCE, THERE WAS NO FURTHER INCREASE BETWEEN MARCH AND JUNE THIS YEAR. SALARIES IN THE TERTIARY SERVICES SECTORS, HOWEVER, HAVE CONTINUED TO INCREASE IN REAL TERMS.

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