ENG-2000 — Page 85

THE ECONOMY

comparison, total exports of goods leaped by 6 per cent in real terms in the first. quarter of 2000, and grew further by 2 per cent in the second quarter and 5 per cent in the third quarter, before easing to a 1 per cent increase in the fourth quarter.

Within total exports of goods, re-exports surged by 18 per cent in real terms in 2000. This well exceeded the 5 per cent rise in 1999, and represented the highest growth figure recorded since 1993. Domestic exports went up by 8 per cent in real terms in 2000. This was in stark contrast to a 7 per cent fall in 1999, and was the fastest growth recorded since 1988.

In line with the surge in re-exports and intake of imports for local use, imports of goods soared by 18 per cent in real terms in 2000, after virtually zero growth in 1999. On a seasonally adjusted quarter-to-quarter comparison, imports of goods jumped by 6 per cent in real terms in both the first and third quarters, and edged up by only 1 per cent in both the second and fourth quarters. Amongst the various import suppliers, the Mainland continued to be the most important one, accounting for 43 per cent of Hong Kong's total import value in 2000. Other main sources included Japan (with a share of 12 per cent), Taiwan (7 per cent) and the United States (7 per cent).

As import intake surged along with the pick-up in domestic demand, the visible trade deficit widened considerably, from $44 billion or 3.1 per cent of the value of imports of goods in 1999 to $85 billion or 5.1 per cent in 2000.

On invisible trade, exports of services likewise put up a robust performance, growing by 14 per cent in real terms in 2000, which was distinctly faster than the 8 per cent increase in 1999. Within the total, receipts from inbound tourism registered a notable gain, in tandem with the sustained strong growth in incoming visitors. At the same time, offshore trading activities and exports of trade-related services were bolstered by the regional trade boom. Exports of business services were lifted by improved business demand in the region. As to imports of services, there was a moderate increase of 3 per cent in real terms in 2000, following virtually zero growth in 1999. To a large extent, this was attributable to a rebound in imports of trade- related services, which more than offset the decline in travel-related spending by Hong Kong residents, caused by a shift from long-haul trips outside the region to short-duration trips to the Mainland and Southeast Asia. With exports of services growing significantly faster than imports of services, the invisible trade surplus rose markedly further to $149 billion in 2000, from $113 billion in 1999. Thus even with an enlarged visible trade deficit, there was still an appreciable combined surplus (including an estimate of imports of gold for industrial use) of $60 billion in 2000, equivalent to 3.2 per cent of the total value of imports of goods and services. The corresponding figures for 1999 were $66 billion and 4.2 per cent.

Domestic Demand

Local consumer spending improved more visibly in 2000, following the modest revival in 1999. Increased employment, higher real labour income, and the inducement from price discounts at the retail outlets all helped to resurrect consumers' propensity to spend. Private consumption expenditure (PCE) posted a solid growth of 5.4 per cent in real terms in 2000, compared with an increase of only 0.7 per cent in 1999. Consumption growth was particularly strong in the early part of the year, bolstered in part by the buoyancy in the local stock market.

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