G.F. 323
6.
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4.
The visible trade deficit continued to narrow in 1976, and this,
together with the surplus on the rest of the balance of payments account,
muct have resulted in a potential net inflow of foreign exchange as
revealed in the increased value of the exchange rate. The Hong Kong
dollar hardened and the terms of trade improved during 1975 and 1976.
The gross domestic product and its components
7.
Consumer demand in 1976 has not increased as much as expected.
Despite a 16% growth in the gross domestic product, private consumption
expenditure increased by only 10% in real terms. Although this was
partly because the demand for food is not particularly sensitive to
income changes, an increase of 10% is not high when compared with
increases in previous years. Some of this relatively low growth can
be attributed to normal delays by consumers in responding to income
changes but some of it is probably the result of continued caution
produced by Hong Kong's experience of the recession. Evidence of this
caution can also be found in the statistics for savings deposits which
were 25% higher than in 1975.
8.
Government consumption expenditure, consisting mainly of
salary payments, increased by 15% in current prices and 8% in real
terms between 1975 and 1976.
9.
Private and public sector investment at constant prices in
1976 was estimated to be 29% higher in 1976 than in 1975. Of this,
expenditure on building and construction, including expenditure on
the Mass Transit Railway, was 40% higher. The corresponding real
increase in expenditure on plant and machinery was estimated to be
around 17%.
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