CONDIDLIT. AL
world demand and trade had not picked up to that extent and many of long Fong's export markets were overstocked. Very low exports in March (the February figure, because of the Chinese New Year, is always low) began the slide. In April and May the HK fell more rapdily, particularly against the US dollar, but then the dollar itself began to fall causing the HK to begin ascending again relative to the US$. All summer the US has continued to full relative to other major currencies and since US trade is roughly a quarter of all Hong Kong's trade the H has occupied a half-way house, falling in value relative to most major trading currencies (except China's-the Renminbi has been fixed all year) but rising relative to the US$ since May.
8. Consumer Prices. These rose by 3-4% last year, the small increase (by world standards) being due mostly to the appreciation of the H. So far this year CPI(A) - the price index for low incones has risen 3.5′′, or
4. more than it was
a year ago and CPI(B) has also risen 3.5% this year or 4.4% from a year ago.
(There is some evidence that CPI(B) will have to be revised fairly soon (next year?) as rising incomes have caused people recently to spend more on food eaten out according to the half-yearly economic remort. But this would require a new Household Expenditure Survey and nay not be feasible for the Census Department who may be engaged on other schemes - certainly if it hindered their collection of data for the quarterly Index of Industrial Output (see para.10) I would not advocate it.) In view of the continued fall in the K (2.7% from January to June) this year I am surprised inflation is not higher since most food and drink is imported. However, apart from a temporary shortage from China in January, world food production is up considerably which has kept food price rises down to this year or 7 on an annual basis.
G. Moner. Following redefinition. M (notes, coins and demand deposits) is said to have grown by 23′ in 1975 and by 24 in 176 (which is more than was thought to be the case with the old, broader, definition of M1) and by June 1977 it wás 28% higher than a year before. M2, the more usual definition of money (M + time deposits + savings deposits) had grown % by June (from January) or 21% from June 1976 to June 1977. Since Murch banks have been trying to increase the money supply by extending more loans to customers than there are deposits (loans increased at an annual rate of 20% between March and June). Although a large part of the increase in loans went to the construction industry another large part went to
*Last year Hong Kong's exports grew by 39%.
-3-
CONFIDENTIAL
/the
No comments yet.
Private notes are available after approval.