ENG-2004 — Page 70

44 The Economy

producing an average annual growth rate of 3.6 per cent in real terms. Its level at US$23,700 in 2004 was among the highest in Asia (Chart 1).

Chart 1

Gross Domestic Product (year-on-year rate of change in real terms)

Per cent

15

10

5

Per capita GDP

0

-5

GDP

-10

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

Over the past two decades, the Hong Kong economy grew by an average of 4.8 per cent in real terms, outpacing the corresponding growth rates of 3.5 per cent for the world economy and 2.9 per cent for OECD economies as a whole. In 2004, the economy entered a full-fledged upturn and posted 8.1 per cent growth.

In line with increased external orientation of the Hong Kong economy, trade in goods expanded by almost eight times and trade in services by almost three times in real terms over the past two decades. In 2004, the total value of visible trade (comprising re-exports, domestic exports and imports of goods) reached $4,127 billion, corresponding to 325 per cent of GDP. This was distinctly larger than the ratios of 171 per cent in 1984 and 233 per cent in 1994. If the value of exports and imports of services is also taken into account, the ratio is even greater, at 376 per cent in 2004, compared with 207 per cent in 1984 and 270 per cent in 1994.

As another indication of the high degree of external orientation, the stock of inward direct investment in Hong Kong amounted to $2,960 billion in market value at end-2003, equivalent to 245 per cent of GDP. Hong Kong is the second most favoured destination for inward direct investment in Asia, next only to the Mainland. The corresponding figures for the stock of outward direct investment in Hong Kong were likewise substantial, at $2,637 billion and 218 per cent, much larger than those for many other economies in Asia. As a major financial centre in the region with huge cross-territory fund flows, Hong Kong's external financial assets and liabilities were also substantial, at $10,746 billion and $7,401 billion respectively at end-2003. The corresponding ratios to GDP in that year were 846 per cent and 583 per cent. Reflecting Hong Kong's sound international investment position, net external financial assets amounted to $3,345 billion at end-2004, equivalent to 264 per cent