XN000022-1995-11-02 — Page 22

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The Economy, ngana

Let me start with the general state of Hong Kong's economy. I have heard Members use the term "recession" to describe its present or projected condition. I do not believe that "recession" is an appropriate way to describe our economy, which is growing this year at a rate of 5% in real terms. A commonly accepted definition of a recession is when the actual level of an economy's GDP has fallen - I repeat - fallen over a continuous period of, at least two consecutive quarters. We are scarcely in such a situation. In the first quarter of 1995, the economy grew by 5.9%, due to a particularly strong rise in export levels. As some members have pointed out, it is simple arithmetic that in forecasting a 5% growth for the year, the growth rate is likely to moderate to below 5% during the latter part of the year. But, for the year as a whole, I would still expect the economy of Hong Kong to achieve real growth of around 5%. This is very much in line with the forecast trend growth rate on which the Government bases its revenue and spending plans.

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I acknowledge that this growth rate represents a slower pace of economic expansion than we had forecast at the start of the year. But I do not accept that a reduction in our forecast growth rate for the year from 5.5% to 5% justifies the more lurid media reports of doom and gloom that have accompanied the release of recent economic data. By no stretch of the imagination can Hong Kong be described as in recession or even threatened by recession. What we are seeing now is a moderation of the very rapid speed at which our economy grew in the latter part of the eighties.

The present rate of 5% growth would be the envy of many industrialised countries, which understand the full meaning of the term "recession" because they have suffered sustained declines in GDP. Through hard work and some good fortune, Hong Kong, like many of this region's economies, has remained largely untouched by the latest global recession.

While we should never be complacent about our own performance, we must accept that, even for resilient and entrepreneurial Hong Kong, an open economy means that; we cannot escape completely from the consequences of major shifts in the market-place or cyclical downturns of the global economy. This means that, from time to time, the pace of growth will slow down. Let me emphasise that it is the pace.. of growth that may decline. But I do not expect that, even in a global recession, Hong Kong's GDP will fall in actual terms. I base this confidence on Hong Kong's record of unbroken annual growth in GDP for the past 35 years.

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