XN000022-1984-02-29 — Page 3

WEDNESDAY, FEBRUARY 29, 1984

SIR JOHN SEES CLEARER SKIES AHEAD'

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THE 1984-85 BUDGET INDICATED CLEARER SKIES AHEAD, THE FINANC I AL SECRETARY, THE HON SIR JOHN BREMRIDGE, TOLD THE LEGISLATICE COUNCIL TODAY (WEDNESDAY).

SUBJECT TO NO UNFORESEEN SHOCK, SIR JOHN BELIEVED THAT:

* THE GROSS DOMESTIC PRODUCT WILL INCREASE BY MORE THAN

SIX PER CENT;

*

INFLATION WILL DROP TO SEVEN PER CENT BY THE END OF THE YEAR;

*

CAPITAL INVESTMENT WILL GROW AGAIN;

* REAL WAGES WILL BEGIN TO RISE WITH STABILISED EMPLOYMENT,

AND

*

THE HONG KONG DOLLAR WILL REMAIN STRONG.

IN HIS FORECAST OF THE ECONOMY FOR 1984, SIR JOHN SAID LAST YEAR ENDED WITH THE ECONOMY ENJOYING THE BENEFITS OF STRONG EXPORT GROWTH AND WITH THE FIRST SIGNS OF THE CONSEQUENT REVIVAL OF DOMESTIC DEMAND APPARENT.

HE SAID IT WAS LIKELY THE ECONOMY'S PERFORMANCE IN 1984 WOULD AGAIN PRIMARILY BE DETERMINED BY THE GROWTH RATE OF EXPORTS.

THE UNITED STATES ECONOMY, HAVING PERFORMED BETTER THAN GENERALLY EXPECTED IN 1983 WITH A GROWTH RATE OF 3.5 PER CENT, IS EXPECTED TO GROW EVEN FASTER IN 1984, WITH A RATE OF GROWTH OF ABOUT FIVE PER CENT BEING FORECAST BY OECD.

BUT, HE SAID, A NUMBER OF FACTORS SUGGEST THAT HONG KONG WOULD BE UNLIKELY TO BENEFIT IN PROPORTION TO THIS INCREASE IN GROWTH.

THE EMPHASIS SEEMED LIKELY TO MOVE AWAY FROM THE RE-STOCKING OF CONSUMER GOODS, WHICH WAS A FACTOR IN THE 26 PER CENT GROWTH RATE IN REAL TERMS OF EXPORTS FROM HONG KONG TO THE US IN 1983.

*THE EXHAUSTION OF CLOTHING AND TEXTILES QUOTAS IN 1983 LEAVES LITTLE ROOM FOR FURTHER GROWTH FOR THESE ITEMS IN 1984. FINALLY IN 1983 THE SURGE IN EXPORTS TO THE US WAS UNDOUBTEDLY HELPED BY THE DEPRECIATION OF THE HONG KONG DOLLAR AGAINST THE US DOLLAR, + HE SAID,

BUT SOME RECOVERY WAS LIKELY IN THE ECONOMIES OF HONG KONG'S OTHER MAJOR MARKETS AND THIS RECOVERY, PLUS A FURTHER SUBSTANTIAL GROWTH IN EXPORTS TO THE US, WOULD GIVE A FORECAST FOR DOMESTIC EXPORTS IN 1984 OF 10 PER CENT IN REAL TERMS, COMPARED WITH THE 14 PER CENT ACHIEVED IN 1983, HE SAID.

THIS, HE SAID, COMBINED WITH A FORECAST GROWTH RATE OF RE-EXPORTS OF 16 PER CENT, WOULD GIVE A GROWTH FORECAST FOR TOTAL EXPORTS OF 12 PER CENT, AGAINST 15 PER CENT IN 1983.

/SIR JOHN