Sir,
Last year in presenting my first Budget to this Council I warned that Hong Kong remained as vulnerable as ever
to external forces, and that volatility in our economic
performance was inevitable. Like others I recognised that there were some clouds on the horizon but I did not predict when the storm would break. The warnings I gave then remain valid today. Already there are signs that the extraordinarily rapid growth we have enjoyed over the last two years is slowing down.
2.
As 1987 progressed, it became apparent that the economy, including our stock market, was becoming overheated. Few, however, foresaw the full extent of the October crash, which affected not only Hong Kong's stock market but also stock markets worldwide. I shall be referring later in this speech.
to those events and the aftermath. But I mention them now for
three reasons. First, I think it is important to note that we
still cannot say with
say with any certainty what will be their effect on the world economy and therefore on Hong Kong itself. Secondly, in Hong Kong and in some other major markets attention has become sharply focussed on
on the operation and structure of the market place. Many are asking what improvements need to be made to ensure that the markets are capable of carrying out the job for which they are intended. Thirdly, perhaps the single most important message that has come through clearly
is that
technology has increasingly made the world a single market. There may be many players but there is only one play.
3.
But today we must not let ourselves be overcome by
gloom. Almost all the economic indicators show that Hong Kong
has done extremely well in the last twelve months and our immediate prospects are good. What I shall be saying this afternoon will reveal the extent to which our buoyant economy
will enable me not only to increase the provision of government
services but also to ease the tax burden on the community
without putting our economy or the longer term stability of our budgetary management at undue risk.
/4. A .
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