XN000022-1984-05-24 — Page 3

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THURSDAY, MAY 24, 1984

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APART FROM GIVING AN OVERALL VIEW, THE REPORT ALSO 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 SAYS THAT DOMESTIC

THE EXPORTS TO HONG KONG'S MAIN MARKETS - THE UNITED STATES, FEDERAL REPUBLIC OF GERMANY, THE UNITED KINGDOM, CHINA AND JAPAN CONTINUED TO GROW RAPIDLY IN REAL TERMS IN THE FIRST QUARTER OF 1984 OVER THE SAME QUARTER OF 1983.

WHILE THIS WAS CONSISTENT WITH THE IMPROVED ECONOMIC PERFORMANCE IN HONG KONG'S MAJOR MARKETS, THE DEPRECIATION OF THE HONG KONG DOLLAR AGAINST THE CURRENCIES OF THESE MARKETS DURING THE TWELVE MONTHS ENDING MARCH 1984 ALSO HELPED BY ENHANCING THE COMPETITIVENESS OF HONG KONG'S DOMESTIC EXPORTS IN THESE MARKETS.

IMPORTS AND RE-EXPORTS ALSO INCREASED RAPIDLY IN THE FIRST QUARTER OF 1984 OVER THE FIRST QUARTER OF 1983. IMPORTS GREW BY ABOUT 23 PER CENT IN REAL TERMS AND RE-EXPORTS BY ALMOST 37 PER CENT.

COMPARING THE FIRST QUARTER OF 1984 WITH THE FIRST QUARTER OF 1983, THE REPORT POINTS OUT THAT GROWTH RATE OF THE VALUE OF TOTAL EXPORTS (DOMESTIC EXPORTS PLUS RE-EXPORTS), AT 54 PER CENT,

THE VISIBLE WAS FASTER THAN THAT OF IMPORTS, AT 43 PER CENT. TRADE GAP THUS NARROWED SIGNIFICANTLY TO 6 PER CENT, FROM 13 PER CENT IN THE FIRST QUARTER OF 1983.

ON THE FINANCIAL SECTOR, THE REPORT NOTES THAT:

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FIRST, THE HONG KONG DOLLAR HELD STEADY AGAINST THE US DOLLAR THROUGHOUT THE FIRST QUARTER, REFLECTING THE EFFECTIVENESS OF THE LINKED EXCHANGE RATE SYSTEM,

SECOND, WITH THE RETURN OF CONFIDENCE IN THE LOCAL CURRENCY, HONG KONG DOLLAR DEPOSITS GREW RAPIDLY, RESULTING IN A RAPID EXPANSION IN THE MONEY SUPPLY, AND

THIRD, THERE WAS EXCESS LIQUIDITY IN THE HONG KONG DOLLAR MONEY MARKET DURING MOST PART OF THE QUARTER, WHICH EXERTED DOWNWARD PRESSURE ON LOCAL INTEREST RATES AND CREATED A DIFFERENTIAL BETWEEN HONG KOND DOLLAR INTEREST RATES AND THOSE FOR US DOLLARS. SITUATION WAS, HOWEVER, TEMPORARY AND TOWARDS THE END OF THE FIRST QUARTER, LOCAL INTEREST RATES ROSE AGAIN.

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ON THE LABOUR SECTOR, THE REPORT OBSERVES THAT EMPLOYMENT IN THE MANUFACTURING SECTOR PICKED UP AS DOMESTIC EXPORTS RECOVERED. EMPLOYMENT IN THE TERTIARY SERVICES SECTOR ALSO SHOWED SOME INCREASE, BUT EMPLOYMENT ON BUILDING AND CONSTRUCTION SITES FELL FURTHER.

/THE REPORT