Growth of Gross Domestic Product and Domestic Exports
4. Because Hong Kong has virtually no natural and mineral resources it is highly dependent for its income on export earnings, a very large proportion of which is in respect of domestic exports of merchandise. As a result, it is to be expected that there will be a fairly high degree of correspondence between the rate of growth of domestic exports and the rate of growth of the gross domestic product.
Growth of Gross Domestic Product and of Domestic Exports, 1969-1973
Increase in domestic exports in quantity terms
(%)
Table 2
Increase in gross domestic product
at constant (1966)
(%)
market prices
(Direction of possible change*)
1969
14.6
Down
16.0
1970
7.0
Up
10.3
1971
1.8
Up
3.9
1972
8.0†
Down
4.5
1973
8.61
Down
5.88
* that is, direction in which growth rate of gross domestic product might change if allowance were made for raw material stock changes.
† preliminary estimate.
‡ forecast.
§ first nine months of 1973 on first nine months of
1972.
Components of the Gross Domestic Product
(a) Private Consumption Expenditure
5. In constant price terms, private consump- tion expenditure, as a proportion of the gross domestic product, declined between 1968 and 1969 from 81% to 77%, but it increased to 85% over the next two years. However, by 1973 it had declined again, to 81%. The rate of growth of the gross domestic product in 1969 was very much greater than in the previous year; it is, therefore, possible that there was some delay in the response of consumers' expenditure to higher incomes at that time which could help to explain the decline in the ratio of private consumption expenditure to the gross domestic product in 1969 and its subsequent increase. But the rapid growth of domestic exports, in quantity terms, in 1969 and 1970 could have resulted in a significantly higher proportion of consumer goods (including food-
2
stuffs) being imported, and this, too, could go some way towards explaining the increase in the ratio after 1969. Equally, it would help explain why, in the period 1969 to 1971, the rate of growth of domestic exports, in quantity terms, was rather more rapid than the rate of growth of the gross domestic product, in con- stant price terms.
6. In view of the fact that domestic exports, in quantity terms, were not increasing at a mark- edly more rapid rate in 1972 and 1973 than in 1971, and were increasing at a substantially slower rate than in 1969 and 1970, it is possible that, in 1972 and 1973, a rather higher propor- tion of private consumption was represented by domestically produced goods. If so, this would partly account for the decline in private con- sumption expenditure in relation to the gross domestic product after 1971; and it would help to explain why the gross domestic product, in constant price terms, increased at a rather faster rate than domestic exports, in quantity terms, in 1972 and 1973. The labour market appeared to be relatively slack in 1972 and 1973, and it is, therefore, possible that household incomes were rising less rapidly than the gross domestic prod- uct. If so, this would also help to explain the decline in the ratio of private consumption expenditure to the gross domestic product, in constant price terms, at that time.
(b) Expenditure on Plant, Machinery and
Equipment
7.
From Table 3, it will be seen that expendi- ture on plant and machinery tended to increase in relation to the gross domestic product, in constant price terms, over the period 1969 to 1973. The proportion increased quite sub- stantially in 1971 and has since remained at a relatively high level.
Expenditure on Plant, Machinery and Equipment* in relation to the Gross Domestic Product, 1969-1973
Table 3
1969
1970
1971
1972†
1973
**
(at constant (1966) market prices)
excluding transport equipment. † preliminary estimate.
forecast.
%
7.9
8.6
10.0
9.6
10.0
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