XN000022-1985-05-23 — Page 3

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23, 1985

ON THE EXTERNAL SECTOR, THE REPORT NOTES THAT THE PERFORMANCE OF DOMESTIC EXPORTS TO HONG KONG'S MAJOR MARKETS VARIED. WHILE DOMESTIC EXPORTS TO CHINA CONTINUED TO GROW RAPIDLY, BY ABOUT 86 PER CENT IN REAL TERMS IN THE FIRST QUARTER OF 1985 COMPARED WITH THE SAME QUARTER LAST YEAR, THOSE TO THE UNITED STATES, THE UNITED KINGDOM, THE FEDERAL REPUBLIC OF GERMANY AND JAPAN DECLINED BY ABOUT SIX PER CENT, 13 PER CENT, 20 PER CENT AND THREE PER CENT RESPECTIVELY IN REAL TERMS.

THE SLOWING DOWN IN THE GROWTH RATE OF THE UNITED STATES ECONOMY AND THE STRENGTH OF THE HONG KONG DOLLAR BOTH CONTRIBUTED TO THESE DECLINES.

ON THE OTHER HAND, OVER THE SAME PERIOD IMPORTS GREW BY ABOUT 11 PER CENT IN REAL TERMS, AND RE-EXPORTS BY ALMOST 35 PER CENT.

THE REPORT FURTHER POINTS OUT THAT COMPARING THE FIRST

THE GROWTH RATE QUARTER OF 1985 WITH THE FIRST QUARTER OF 1984, OF THE VALUE OF TOTAL EXPORTS (DOMESTIC EXPORTS PLUS RE-EXPORTS), AT 19 PER CENT, WAS FASTER THAN THAT OF IMPORTS, AT 11 PER CENT.

IN CONSEQUENCE, A VISIBLE TRADE SURPLUS, EQUIVALENT TO ONE PER CENT OF THE VALUE OF IMPORTS, WAS RECORDED IN THE FIRST QUARTER OF THIS YEAR. COMPARED WITH A VISIBLE TRADE GAP OF SIX PER CENT IN THE FIRST QUARTER OF 1984.

ON THE FINANCIAL SECTOR, THE REPORT NOTES THE FOLLOWING DEVELOPMENTS:

* FIRST, THE HONG KONG DOLLAR REMAINED STEADY

AGAINST THE US DOLLAR THROUGHOUT THE FIRST QUARTER OF 1985, NOTWITHSTANDING THE LATTER'S STRENGTH INTERNATIONALLY DURING MOST OF THE PER IOD;

* SECOND, THE GROWTH RATE OF THE HONG KONG

DOLLAR MONEY SUPPLY SLOWED DOWN DURING THE FIRST QUARTER, AS DID THAT OF LOANS AND ADVANCES FOR USE IN HONG KONG; AND

*

THIRD, THERE WAS AMPLE LIQUIDITY IN THE HONG KONG DOLLAR MONEY MARKET DURING MOST OF THE FIRST QUARTER, WHICH EXERTED DOWNWARD PRESSURE ON LOCAL INTEREST RATES. ADMINISTERED INTEREST RATES WERE TWICE ADJUSTED DOWNWARDS IN THE LATTER HALF OF JANUARY AND TWICE AGAIN IN APRIL.

ON THE LABOUR SECTOR, THE REPORT OBSERVES THAT TOTAL EMPLOYRENT INCREASED BY FIVE PER CENT DURING 1984, FOLLOWING AN INCREASE OF ONE PER CENT DURING 1983. WHILE INCREASES OCCURRED IN MANUFACTURING AND IN THE SERVICES SECTORS, EMPLOYMENT ON BUILDING AND CONSTRUCTION SITES CONTINUES TO DECLINE DURING THE YEAR.

THE REPORT