TNAG-1012-FCO40-1262-Address-by-Sir-Murray-MacLehose--Governor-of-Hong-Kong--at-t-1981 — Page 21

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5

THE ECONOMY IN 1980

15.

1.

1

In 1980 the gross domestic product grew by 10% in real terms

the fifth successive year of rapid growth. As in 1979, there was a

fair degree of stability with the growth rate of total final demand

roughly in line with that of the economy's output. Growth continued to

be export-led, though to a much lesser extent than in 1979. But in the

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second half of the year as Hong Kong became increasingly affected by

the sluggish state of the world economy, there was a decline in the

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growth rate of domestic exports. During roughly the same period, the

growth rate of domestic demand picked up. So in the second half of the

there was a shift from domestic exports to domestic demand as the

impetus to economic growth.:

year,

16.

Continuing the trend started in 1979, prices increased"

rapidly in 1980. This was due to similar increases in the rest of the

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world, coupled with the impact of exchange rates on the Hong Kong dollar

price of imports. Domestic, influences on prices were generally

favourable to the slowing down of inflation as there were few marked

imbalances between the demand for and the supply of domestic resources.

In particular the supply of labour grew rapidly during 1980 because of

the direct and indirect effect of immigration, and exceeded the increase

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in demand for labour, leading to a slight rise in unemployment.

17.

The main imbalance was in the land and property market.

Prices and rents for, operty generally, and particularly for commercial

property continued to rise, reflecting a demand for commercial property

in excess of its supply in itself a sign of confidence in Hong Kong and the prices developers vero prepared to bid for land rose sharply.

But the influence on prices of demand was

/undoubtedly