XN000022-1986-02-26 — Page 36

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WEDNESDAY, FEBRUARY 26, 1986

RE-EXPORTS CONTINUED TO GROW, AS DID IMPORTS, BY 25 PER CENT AND SIX PER CENT RESPECTIVELY.

+AS A RESULT, THE VISIBLE TRADE ACCOUNT RECORDED A SURPLUS EQUIVALENT TO 1.6 PER CENT OF THE VALUE OF IMPORTS, A UNIQUE OUTCOME FOR HONG KONG IN THE POST-WAR PERIOD, SAID SIR JOHN.

WITHIN DOMESTIC DEMAND, PRIVATE CONSUMPTION EXPENDITURE GREW BY FIVE PER CENT. OVERALL EXPENDITURE ON BUILDING AND CONSTRUCTION, HOWEVER, DECLINED BY 10 PER CENT DUE TO THE COMPLETION OF A NUMBER OF PUBLIC WORKS PROJECTS AND THE MAJOR PART OF THE MTR ISLAND LINE. OVERALL EXPENDITURE ON PLANT AND MACHINERY DECLINED BY THREE PER CENT, REFLECTING THE EFFECT OF THE POOR DOMESTIC EXPORT PERFORMANCE ON MANUFACTURERS' INVESTMENT PLANS.

SIR JOHN SAID IN NATIONAL ACCOUNT TERMS, PUBLIC SECTOR EXPENDITURE OVERALL DECLINED BY EIGHT PER CENT.

THE

DESPITE THE POOR DOMESTIC EXPORT PERFORMANCE UNEMPLOYMENT AND UNDEREMPLOYMENT RATES REMAINED AT A LOW LEVEL. THE EFFECT OF JOB LOSSES IN MANUFACTURING WAS OFFSET BY INCREASED EMPLOYMENT IN THE SERVICES SECTORS, PARTICULARLY THOSE ASSOCIATED WITH THE RE-EXPORT TRADE. THE LATTER HAD BECOME OF GREATER VALUE TO HONG KONG THAN WAS GENERALLY ACKNOWLEDGED, SIR JOHN SAID.

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IN THE FOURTH QUARTER OF 1985, THE SEASONALLY ADJUSTED UNEMPLOYMENT RATE STOOD AT 3.2 PER CENT EFFECTIVELY FULL EMPLOYMENT AND LOWER THAN 12 MONTHS BEFORE - AND THE UNDEREMPLOYMENT RATE AT ONLY 1.1 PER CENT. DURING THE YEAR EARNINGS IN MOST SECTORS INCREASED IN REAL TERMS, HELPED BY THE SLOWING DOWN IN THE RATE OF INFLATION.

THE AVERAGE RATE OF INFLATION, AS MEASURED BY THE CONSUMER PRICE INDEX (A), WAS 3.2 PER CENT ÎN 1985, COMPARED WITH 8.1 PER CENT IN 1984.

SIR JOHN SAID +THIS WELCOME OUTCOME IS ATTRIBUTABLE TO A NUMBER OF FACTORS. INCLUDING THE WEAK GROWTH IN DOMESTIC DEMAND THE MODEST RATES OF INFLATION IN OUR MAJOR TRADING PARTNERS, GENERALLY SOFT COMMODITY PRICES, SOUND GOVERNMENT POLICIES, AND THE RELATIVE STRENGTH OF THE HONG KONG DOLLAR IN EARLY 1985.+

HE ADDED: +THUS IN 1985 IN COMMON WITH A NUMBER OF OTHER ECONOMIES IN THIS REGION, MORE DIFFICULT INTERNATIONAL TRADING CONDITIONS RESULTED IN A GDP GROWTH RATE SUBSTANTIALLY BELOW THAT EARLIER FORECAST. +

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