TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 233

CONFIDENT TAL

10. Export earnings are forecast to rise by 14% in 1973 and a further 9% in 1974. This reflects a much faster rise in prices in 1973 followed by a slower increase in 1974, accompanied by lower volume rises than in 1972. Import values, which are forecast to increase by 15% and 6% in 1973 and 1974, respectively, reflect a similar pattern of price increase as exports rapid in 1973 and more slowly in 1974. After little change in the volume in 1972, imports are forecast to rise by an average of around 4% in each

year. A fall in the net invisible surplus in 1973 and another in

1974 are mainly due to lower levels of grants forecast for Bangladesh.

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11. An increase of nearly £70 million is forecast in the net inflow of long-term capital in 1973 with little change in the following year. The rise in 1973 mainly reflects increases of official capital into India, Pakistan and Bangladesh. These changes are also shown in Appendix Table 3 which gives the levels of aid to developing countries in recent years together with the predictions for the forecast period.

12.

The reserves of the oil-developing countries are expected to rise more rapidly in 1973 than in the previous year with a further sharp increase in 1974. The rapidly increasing oil export receipts of the Persian Gulf Sheikhdoms due both to improved prices and increased volume are mainly responsible, although following a net outflow in 1972 (mainly due to import credit repayments) Nigeria's reserves are expected to increase in 1973 and again in 1974.

13. Notes on individual OSA countries are appended.

CONFIDENTIAL