XN000022-1984-08-28 — Page 3

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TUESDAY, AUGUST 28, 1984

THE REPORT REVIEWS ECONOMIC DEVELOPMENTS IN THE FIRST HALF

IT OF 1984 USING SUCH STATISTICS AS ARE CURRENTLY AVAILABLE. ALSO UPDATES THE ANALYSIS OF THE ECONOMY IN THE FIRST QUARTER ECONOMIC REPORT 1984 PUBLISHED IN MAY. 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 POINTS OUT THAT THE YEAR-ON-YEAR GROWTH RATE IN REAL TERMS OF DOMESTIC EXPORTS ACCELERATED TO ABOUT 25 PER CENT IN THE FIRST HALF OF 1984 FROM NINE PER CENT IN THE FIRST HALF AND 19 PER CENT IN THE SECOND HALF OF 1983.

IN PARTICULAR, DOMESTIC EXPORTS TO CHINA GREW BY ABOUT 57 PER CENT IN REAL TERMS IN THE FIRST HALF OF THIS YEAR, WITH THE RESULT THAT CHINA HAS OVERTAKEN THE FEDERAL REPUBLIC OF GERMANY AS HONG KONG'S THIRD LARGEST EXPORT MARKET (AFTER THE UNITED STATES AND THE UNITED KINGDOM).

IMPORTS AND RE-EXPORTS ALSO ROSE RAPIDLY, BY ABOUT 19 PER CENT AND 34 PER CENT RESPECTIVELY IN REAL TERMS IN THE FIRST HALF OF THIS YEAR. THESE GROWTH RATES WERE AGAIN HIGHER THAN THOSE RECORDED IN THE FIRST AND SECOND HALVES OF 1983.

THE REPORT POINTS OUT THAT THE GROWTH RATE OF THE VALUE OF TOTAL EXPORTS (DOMESTIC EXPORTS PLUS RE-EXPORTS) IN THE FIRST HALF, AT 49 PER CENT, WAS FASTER THAN THAT OF IMPORTS, AT 39 PER CENT. THE VISIBLE TRADE GAP THUS NARROWED TO FIVE PER CENT IN THE FIRST HALF OF THIS YEAR, COMPARED WITH 12 PER CENT IN THE FIRST HALF OF 1983.

ON THE FINANCIAL SECTOR, THE REPORT NOTES THE FOLLOWING DEVELOPMENTS DURING THE FIRST HALF OF 1984.

FIRST, THE EXCHANGE VALUE OF THE HONG KONG DOLLAR, IN TERMS OF ITS LINKED RATE WITH THE US DOLLAR, REMAINED LARGELY STABLE

HOWEVER, IN TERMS OF UNDER THE LINKED EXCHANGE RATE SYSTEM. THE TRADE-WEIGHTED EXCHANGE RATE INDEX, THERE WAS AN APPRECIATION, REFLECTING THE GLOBAL STRENGTH OF THE US DOLLAR.

SECOND. THE GROWTH RATE OF THE MONEY SUPPLY SLOWED DOWN DURING THE SECOND QUARTER OF 1984, AFTER THE ACCELERATION IN THE FIRST QUARTER, LARGELY DUE TO THE SLOWER GROWTH IN LOANS AND ADVANCES. BUT THE FOREIGN CURRENCY COMPONENT OF THE MONEY SUPPLY GREW AT A FASTER RATE THAN ITS HONG KONG DOLLAR COUNTERPART.

THIRD, LARGELY IN RESPONSE TO CHANGES IN THE DEMAND FOR, AND THE SUPPLY OF. FINANCIAL CAPITAL IN THE LOCAL MONEY MARKET AS WELL AS TO MOVEMENTS IN US DOLLAR INTEREST RATES, LOCAL ADMINISTERED INTEREST RATES WERE ADJUSTED DOWNWARDS ON FOUR OCCASIONS AND SUBSEQUENTLY UPWARDS ON FIVE OCCASIONS, SO THAT AT THE END OF JUNE, THEY WERE LITTLE CHANGED FROM THE LEVELS PREVAILING AT THE END OF DECEMBER 1983.

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