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1 HKK 5/ +3.
WEDNESDAY, OCTOBER 16, 1974
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GOVERNOR CONFIDENT OF HONG KONG'S ECONOMIC FUTURE
CONTINUED GROWTH PREDICTED
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THE GOVERNOR, SIR MURRAY MACLEHOSE, TODAY SOUNDED A NOTE OF CONFIDENCE IN HONG KONG'S ECONOMY WHICH, HE PREDICTED, IS CERTAINLY EXPECTED TO CONTINUE TO GROW THIS YEAR AT A RATE OF FOUR PER CENT IN REAL TERMS.
HOST PROBABLY
IN HIS OPENING ADDRESS TO THE NEW SESSION OF THE LEGISLATIVE COUNCIL, SIR MURRAY REVIEWED THE LOCAL ECONOMY IN RELATION TO THE INTERNATIONAL ECONOMIC SITUATION, AND NOTED THAT INTERVENTION BY VARIOUS COVERNMENTS WAS 5) GREAT THAT +A RECESSION IS UNLIKELY TO ASSUME AN EXTREME FORM.+
ON INFLATION, HE SAID ONE COULD AT LEAST BE THANKFUL THAT INCOMES WERE NOT BEING EATEN AWAY BY INFLATION! IN QUITE THE SAME WAY AS LAST YEAR.
HOWEVER, HE CAUTIONED THAT IT WOULD BE WRONG TO ASSUME THAT LAST YEAR'S EXTERNAL INFLATIONARY PRESSURES WOULD NO LONGER HAVE ANY EFFECT ON THE LOCAL ECONOMY OR THAT THERE WOULD NOT BE ANY FURTHER PRESSURES THIS YEAR.
COMMENTING ON EXPORTS, HE WAS CONFIDENT THAT THERE WOULD BE A FAIR HOPE THAT +A SUFFICIENTLY HEALTHY DEMAND WILL CONTINUE TO KEEP HONG KONG BUSY.+
+IF I MIGHT SAY SO,+ SIR MURRAY SAID, +HONG KONG IS SO ACCUSTOMED TO GROWTH THAT IS PHENOMENAL, THAT WE SHOULD GUARD AGAINST TOO PESSIMISTIC A REACTION TO GROWTH THAT IS, BY COMPARATIVE. STANDARDS, MERELY ENVIABLE.+
IN LOOKING DISPASSIONATELY AT THE INTERNATIONAL ECONOMIC SITUATION, THE GOVERNOR NOTED THAT ONE MIGHT SEE IN IT ELEMENTS FROM WHICH HONG KONG HIGHT DRAW ENCOURAGEMENT.
+WE ARE NOT AT ALL FACING A SITUATION OF SLUMP LIKE THAT IN THE '20S OR EARLY '30S. THE LEVEL OF ECONOMIC INTERVENTION BY THE GOVERNMENTS OF THE DEVELOPED WORLD IS NOW SO GREAT, AND THE CHANNELS OF INTERNATIONAL CO-OPERATION SO EXTENSIVE, AND THE POLITICAL PRESSURES ON GOVERNMENTS TO AVOID EXCESSIVELY DEFLAT-
IONARY SITUATIONS SO STRONG, THAT A RECESSION IS UNLIKELY TO ASSUME AN EXTREME FORM.+
DURING THE DOWN-TURN NOW IN EXISTENCE, HE SAID THE PURCHASING POWER OF THE POPULATIONS OF DEVELOPED COUNTRIES WAS CONTINUING AT A COMPARATIVELY HIGH LEVEL.
WHILE DEMAND FOR SOME PRODUCTS, AND IN PARTICULAR CARS AND CONSUMER DURABLES IS BEING AFFECTED, THE COURSE OF DEMAND FOR THE SORT OF THINGS THAT HONG KONG EXPORTED WAS MUCH MORE DIFFICULT TO GAUGE. MOREOVER THE DOWN-TURN WAS NOT EVENLY SPREAD THROUGHOUT THE HONG KONG MARKETS.
/+NO DOUBT
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WEDNESDAY, OCTOBER 16, 1974
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+NO DOUBT OUR EXPORTERS WILL FACE INCREASED COMPETITION, AND PERHAPS DIFFICULTIES OVER FINANCE, BUT THERE IS A FAIR HOPE THAT IN OUR MARKETS AS A WHOLE A SUFFICIENTLY HEALTHY DEMAND WILL CONTINUE TO KEEP HONG KONG BUSY.+
THE GOVERNOR WENT ON TO SAY THAT LOCAL INDUSTRIALISTS, WITH THEIR USUAL ENTERPRISE, WOULD BE SEARCHING THE WORLD'S MARKETS FOR CONTRACTS, +AND YOU MAY BE SURE THAT THE TRADE DEVELOP- MENT COUNCIL WILL BE DOING EVERYTHING WITHIN ITS POWER TO HELP THEM TO FIND NEW OPENINGS AND EXPAND OLD ONES.
+THE GOVERNMENT FOR ITS PART, AND WITH THE SUPPORT OF HER MAJESTY'S GOVERNMENT, WILL CONTINUE TO DO ALL THAT DETERMINED NEGOTIATIONS CAN TO EASE RESTRICTIONS ON OUR TRADE AND RESIST ATTEMPTS AT FURTHER IMPOSITIONS.
+ THE PROSPECTS OF MAINTAINING OUR EXPORTS ARE FAVOURABLE BECAUSE HONG KONG'S PRODUCTIVITY IS NOW HIGH AND OUR COMPETITIVE POSITION ABROAD IS VERY STRONG, INDEED AS STRONG AS IT HAS EVER BEEN, SO WE ARE IN A POSITION TO SUPPLY WHAT DEMAND THERE IS NOW, AND TO RESPOND VERY QUICKLY TO ANY INCREASE IN DEMAND IN THE FUTURE.
+PROVIDED WE RETAIN THIS COMPETITIVE EDGE I EXPECT HONG KONG TO RIDE CURRENT PROBLEMS WITH LESS TROUBLE THAN MOST OTHER COUNTRIES,+ HE SAID.
THE GOVERNOR NOTED THAT WHEN HE ADDRESSED THE COUNCIL LAST YEAR THE GROSS DOMESTIC PRODUCT WAS INCREASING, IN REAL TERMS, AT AN ANNUAL RATE OF SOME SEVEN TO EIGHT PER CENT, JUST A LITTLE ABOVE THE GROWTH RATE WHICH IT WAS BELIEVED COULD BE SUSTAINED IN THE LONGER TERM.
THIS WAS AGAINST THE THEN BACKGROUND OF INTERNATIONAL EXCHANGE RATE VARIATIONS, COMMODITY SHORTAGES OVERSEAS, AND AN ALMOST UNBELIEVABLY RAPID RATE OF WORLD INFLATION. +IT REPRESENTED A TRULY REMARKABLE ACHIEVEMENT BY OUR MANUFACTURERS AND EXPORTERS.+
IT WAS TRUE, HE CONTINUED, THAT THIS WAS NOT WITHOUT SOME SLACKENING OF DEMAND IN THE LABOUR MARKET, AND THERE WERE IN CONSEQUENCE SOME WHOSE PERSONAL CIRCUMSTANCES WERE A GOOD DEAL LESS ROSY THAN THE PERFORMANCE OF THE ECONOMY AS A WHOLE MIGHT HAVE SUGGESTED.
+NEVERTHELESS, HONG KONG'S COMPETITIVE POSITION WAS EXTREMELY STRONG AND A GOOD DEAL STRONGER THAN A YEAR OR TWO EARLIER. THIS CARRIED THE POSSIBILITY, EVEN PROBABILITY, THAT OUR EXPORTS WOULD CONTINUE TO GROW AT A RAPID RATE, AND WITH THEM THE GROSS DOMESTIC PRODUCT.
+THERE WAS THEREFORE, GOOD REASON TO BELIEVE THAT THE DEMAND FOR LABOUR WOULD RISE AGAIN AND WITH IT WAGE LEVELS.+
/FURTHERMORE,
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WEDNESDAY, OCTOBER 16, 1974
FURTHERMORE, SIR MURRAY SAID CONSUMER PRICES, IN THE AUTUMN OF 1973, WERE ALREADY SHOWING SIGNS OF LEVELLING-OFF CAND EVEN FALLING IN SOME INSTANCES) AND SO AT THAT TIME THERE · WAS EVERY REASON TO EXPECT A FURTHER IMPROVEMENT IN LIVING STANDARDS IN 1974 ACROSS THE WHOLE SPECTRUM OF SOCIETY.
BUT THEN CAME THE QUITE UNEXPECTED OIL CRISIS AND THE WORLD ECONOMY WAS KNOCKED OFF COURSE. AFTER MAKING ALLOWANCE FOR THE IMPACT ON THE ECONOMY OF THESE NEW CIRCUMSTANCES BY LAST FEBRUARY IT WAS THOUGHT THAT THE GROSS DOMESTIC PRODUCT IN 1974 WOULD INCREASE AFTER ALL, IN REAL TERMS BY SOME FOUR PER CENT.
WHILST THIS WAS SUBSTANTIALLY LESS THAN MIGHT OTHERWISE HAVE BEEN THE CASE, IT WAS STILL BY NO MEANS INSIGNIFICANT.
TOUCHING ON THE OIL SITUATION, THE GOVERNOR NOTED THAT THE SHORTAGE IN HONG KONG WAS FAIRLY BRIEF. AND OF LITTLE REAL SIGNIFICANCE, AND THE INDUSTRIALISTS ADAPTED TO THE SITUATION OF SHORTAGES AND CHANGES IN THE SUPPLIES AND PRICES OF OIL-BASED RAW MATERIALS WITH THEIR USUAL SPEED.
+OUR EXTERNAL TRADE CONTINUED TO BE BUOYANT IN THE FIRST HALF OF THIS YEAR AND IN THE TWELVE MONTHS TO JUNE 1974, DOMESTIC EXPORTS WERE OVER 8-1/2 PER CENT MORE IN VOLUME THAN IN THE PREVIOUS TWELVE-MONTH PERIOD.+
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THE GOVERNOR CONTINUED THAT THE ENORMOUS RISE IN THE PRICE OF OIL, ATTEMPTS BY SOME OTHER COMMODITIES TO FOLLOW SUIT, BALANCE OF PAYMENTS. PROBLEMS, LACK OF LIQUIDITY, AND HIGH INTEREST RATES, HAD ALL TOGETHER PRODUCED A SITUATION IN THE REST OF THE WORLD THAT WOULD TAKE TIME TO SOLVE, AND THAT A PERIOD OF ADJUSTMENT WAS INEVITABLE.
+HOWEVER, THESE INTERCONNECTED PROBLEMS ARE OF SUCH GREAT. IMPORTANCE FOR THE WORLD'S ECONOMIES, AND I MIGHT ADD THE WORLD'S ELECTORATES, THAT AT LEAST WE HAVE THE ASSURANCE THAT THEY ARE RECEIVING MAXIMUM ATTENTION FROM GOVERNMENTS, AND THAT THE BEST BRAINS AVAILABLE EVERYWHERE ARE WORKING ON THEM.
+ THE PROBLEMS INVLOVED ARE OF COURSE NEW TO BOTH CREDITORS AND DEBTORS ALIKE. BUT INSOFAR AS THERE HAVE BEEN ANY RECENT DEVELOPMENTS THEY HAVE BEEN IN THE RIGHT DIRECTION.+
THERE HAD AT LEAST BEEN NO FURTHER DRAMATIC RISE IN THE PRICE OF OIL, AND THE BEGINNINGS OF A PROCESS OF RECYCLING OF OIL REVENUES CAN BE DISCERNED.
+PROVIDED THERE IS NO SETBACK, ONE CAN REASONABLY EXPECT THAT IN DUE COURSE THESE TENDENCIES WILL DEVELOP, WITH OIL PRICES STABILISING, THE PROCESS OF RECYCLING GAINING MOMENTUM AND FINDING NEW INSTITUTIONAL CHANNELS, INTEREST RATES DECLINING FROM THE IR PRESENT LEVELS, AND GENERALLY SPEAKING AN EASING OF CURRENT CONSTRICTIONS ON INVESTMENT AND DEMAND,+ HE SAID.
/WHILE A
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