XN000022-1983-02-23 — Page 4

WEDNESDAY, FEBRUARY 23, 1983*

MR BREMRIDGE BASED THIS FORECAST ON A SLIGHT IMPROVEMENT EXPECTED FOR THE GERMAN ECONOMY AND A SEVEN PER CENT DEPRECIATION OF THE HONG KONG DOLLAR AGAINST THE DEUTSCHE MARK IN 1982.

AS FOR THE REST OF THE WORLD, WHICH ABSORBED 45 PER CENT OF HONG KONG'S DOMESTIC EXPORTS IN 1982, PROSPECTS SHOULD BE MORE ENCOURAGING, PARTICULARLY FOR COUNTRIES WITHIN THE ASIAN REGION, HE SAID.

HE ESTIMATED THE GROWTH RATE OF HONG KONG'S DOMESTIC EXPORTS FOR THESE MARKETS COMBINED AT FIVE PER CENT, WHICH IS HIGHER THAN THE PERFORMANCE LAST YEAR.

COMBINING THE FORECASTS FOR INDIVIDUAL COMPONENTS OF EXPENDITURE, MR BREMRIDGE ANTICIPATED A FOUR PER CENT GROWTH FOR HONG KONG'S GROSS DOMESTIC PRODUCT, AN IMPROVEMENT OVER THE ESTIMATED GROWTH RATE OF 2.4 PER CENT FOR LAST YEAR.

WITH THE 1983 GROWTH RATE OF THE POPULATION ESTIMATED AT TWO PER CENT, THE PER CAPITA GDP GROWTH RATE IS FORECAST TO BE SLIGHTLY ABOVE ONE PER CENT IN REAL TERMS, ABOUT THE SAME AS THE ESTIMATED GROWTH RATE IN 1982, MR BREMRIDGE SAID.

THOUGH THE FOUR PER CENT GDP GROWTH RATE IS LOW BY HONG KONG'S HISTORICAL EXPERIENCE, IT COMPARES WELL WITH THOSE OF OTHER COUNTRIES, HE POINTED OUT.

+FURTHERMORE, SHOULD THE FORECAST BE BORNE OUT, IT WOULD IMPLY THAT THE HONG KONG ECONOMY HAD SHIFTED BACK TO EXPORT-LED GROWTH, HE REMARKED.

ON THIS SHIFT, MR BREMRIDGE POINTED OUT THAT FIRST, THE GROWTH RATE OF TOTAL FINAL DEMAND, EXCLUDING RE-EXPORTS, AT FOUR PER CENT, WOULD BE THE SAME AS THE GDP GROWTH RATE.

+

THIS MEANS IT IS UNLIKELY THAT THERE WOULD BE ANY SIGNIFICANT IMBALANCE BETWEEN AGGREGATE DEMAND AND SUPPLY. PARTICULARLY AS THERE WERE SIGNS OF SOME SPARE PRODUCTIVE CAPACITY AT THE END OF 1982, HE EXPLAINED.

NO UNDUE PRESSURE SHOULD BE GENERATED ON THE INTERNAL COST/ PRICE STRUCTURE, HE ADDED.

THE GROWTH RATE OF RETAINED IMPORTS, AT FIVE PER CENT, WOULD BE SLIGHTLY FASTER THAN THE GDP GROWTH RATE, REFLECTING THE INCREASED VOLUME OF RETAINED IMPORTS OF RAW MATERIALS AND SEMI-MANUFACTURES AND OF CAPITAL GOODS ASSOCIATED WITH A RECOVERY, HE SAID,

SECOND, WITH TOTAL FINAL DEMAND, THE GROWTH RATE OF TOTAL EXPORTS AT SEVEN PER CENT AND THE GROWTH RATE OF DOMESTIC EXPORTS AT FIVE PER CENT WOULD BE HIGHER THAN THE GROWTH RATE OF DOMESTIC DEMAND AT FOUR PER CENT.

MOREOVER, UNLIKE THE SITUATION IN 1982, THE GROWTH RATE OF INVESTMENT DEMAND WOULD BE FASTER THAN THAT OF CONSUMER DEMAND.

/THIRD, WITHIN