TNAG-1641-FCO40-2288-Budget-of-Hong-Kong-1987 — Page 33

had clearly been falling (ll). The average annual growth rate over the five-year period ending 1980 was 12.3%. This five-year trend growth rate fell steadily every year thereafter and was

expected to be around 4.8% for the five-year period ending 1986. But in the light of the higher than expected growth rate

achieved in 1986 and what we now foresee for 1987, I consider

that a limited upward revision of the growth rate assumption is

needed. I have therefore adopted a medium range planning

assumption of 5 1/2%. Inevitably, in some years the actual

growth rate will be higher, and in others it will be lower.

is the overall trend that is important.

39.

•

It

Any public sector has a tendency to grow. As an American journalist once said, "Government expands to absorb

revenues and then some." In Hong Kong, however, we have sought

to contain the relative size of the public sector by limiting

expenditure growth to within the trend growth rate of the

economy. This remains our guiding principle. In 1985-86 the

actual growth rate in consolidated account expenditure was 2.7%

and is forecast to be 4.1% in 1986-87. Taking these two years together, the real growth

the real growth in expenditure is

in expenditure is within the growth

rate of GDP.

(11)

Five years ending

1980

1981

1982

1983

1984

1985

1986 (based on the 1986 GDP

forecast made in the 1986-87 budget speech)

Average annual growth rate in real terms of the GDP

(응)

12.3

10.8

8.8

8.2

7.8

5.7

4.8

1986 (based on the preliminary

estimate of GDP for 1986)

5.6

1987 (based on the present 1987

GDP forecast)

6.3

/40. The

...

12

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