XN000022-1984-08-28 — Page 2

TUESDAY, AUGUST 28, 1934

EXPORT-LED ECONOMIC RECOVERY SUSTAINED

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THE EXPORT-LED ECONOMIC RECOVERY WAS WELL SUSTAINED IN THE FIRST HALF OF 1984, ACCORDING TO THE HALF-YEARLY ECONOMIC REPORT 1984 PUBLISHED TODAY BY THE GOVERNMENT.

REFLECTING THE CONTINUED IMPROVEMENT IN THE ECONOMIES OF SEVERAL OF HONG KONG'S MAJOR EXPORT MARKETS, DOMESTIC EXPORTS GREW BY 45 PER CENT IN VALUE TERMS OR ABOUT 25 PER CENT IN REAL TERMS IN THE FIRST HALF OF THIS YEAR, COMPARED WITH THE SAME PERIOD LAST YEAR.

NOTWITHSTANDING PREDICTIONS OF A GRADUAL SLOWING DOWN IN THE GROWTH RATE OF THE UNITED STATES ECONOMY, THE REPORT SAYS THAT THE SHORT-TERM PROSPECTS FOR DOMESTIC EXPORTS ARE LIKELY TO REMAIN ENCOURAGING, IN VIEW OF THE SUBSTANTIAL INCREASE IN REAL TERMS IN RETAINED IMPORTS OF RAW MATERIALS AND SEMI-MANUFACTURES AND THE STRONG ORDER-BOOK POSITIONS OF MANY INDUSTRIES IN THE FIRST HALF.

FOLLOWING THE IMPROVEMENTS IN EXPORT ACTIVITIES AND IN THE LABOUR MARKET SITUATION, DOMESTIC DEMAND RECOVERED IN THE FIRST HALF OF 1984.

COMPARED WITH THE FIRST HALF OF 1983, RETAINED IMPORTS OF CONSUMER GOODS AND OF CAPITAL GOODS GREW BY ABOUT EIGHT PER CENT AND 24 PER CENT RESPECTIVELY IN REAL TERMS. THESE INCREASES COMPARE FAVOURABLY WITH THE CORRESPONDING DECLINES OF ONE PER CENT AND FIVE PER CENT IN 1983.

THE REPORT SAYS THAT THE UNEMPLOYMENT AND UNDEREMPLOYMENT SITUATION FOR THE LABOUR FORCE AS A WHOLE IMPROVED FURTHER IN THE SECOND QUARTER OF THIS YEAR, AFTER CONSIDERABLE IMPROVEMENT IN THE MIDDLE OF 1983 AND RELATIVE STABILITY IN THE FIRST QUARTER OF 1984. WITH THE SEASONALLY ADJUSTED UNEMPLOYMENT RATE AT 3.5 PER CENT IN THE SECOND QUARTER, THE LABOUR FORCE WAS EFFECTIVELY FULLY EMPLOYED.

THE RATE OF INFLATION (AS MEASURED BY THE CONSUMER PRICE INDEX A) SLOWED DOWN TO NINE PER CENT IN THE SECOND QUARTER OF 1984, FROM A YEAR-ON-YEAR RATE OF INCREASE OF 11 PER CENT IN THE FIRST QUARTER.

IN ANNUAL ISED TERMS, THE RATE OF INCREASE WAS 5.1 PER CENT DURING THE FIRST HALF OF 1984, COMPARED WITH 13.2 PER CENT DURING THE SECOND HALF OF 1983.

THIS DECELERATION IN THE RATE OF INCREASE IN CONSUMER PRICES SUGGESTS THAT THE SHARP DEPRECIATION OF THE HONG KONG DOLLAR UP TO SEPTEMBER 1983 IS NO LONGER HAVING AN ADVERSE EFFECT ON THE RATE OF INCREASE OF RETAIL PRICES.

/THE REPORT