ENG-2005 — Page 70

44 The Economy

Chart 1

Per cent

15

10

5

Gross Domestic Product

(year-on-year rate of change in real terms)

Per capita GDP

0

-5

GDP

-10

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Over the past two decades, the Hong Kong economy grew by an average of 5.3 per cent in real terms, outpacing the corresponding growth rates of 3.6 per cent for the world economy and 2.8 per cent for OECD economies as a whole. The economy continued to record another year of spectacular performance in 2005, with real GDP growing by a strong 7.3 per cent.

In line with the Hong Kong economy's increased openness amid the growing influence of globalisation, trade in goods expanded more than eight times and trade in services more than three times in real terms over the past two decades. In 2005, the total value of visible trade (comprising re-exports, domestic exports and imports of goods) reached $4,563 billion, equivalent to 330 per cent of GDP. This was considerably larger than the ratios of 167 per cent in 1985 and 252 per cent in 1995. If the value of exports and imports of services is also taken into account, the ratio is even greater, at 383 per cent in 2005, as compared to 205 per cent in 1985 and 291 per cent in 1995.

The stock of inward direct investment in Hong Kong which amounted to $3,522 billion in market value at the end of 2004, equivalent to 273 per cent of GDP, was another strong indication of Hong Kong's increasingly international focus. 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 $3,134 billion and 243 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 $11,657 billion and $8,175 billion respectively at the end of 2005. The corresponding ratios to GDP in that year were 843 per cent and 591 per cent. Reflecting Hong Kong's sound international investment position, net external financial assets amounted to $3,482 billion at the end of 2005, equivalent to