ENG-2005 — Page 84

54 The Economy

an improvement in efficiency. Growth in retained imports of consumer goods accelerated in late 2005, possibly prompted by the need to replenish stock after several quarters of drawdown. On the other hand, retained imports of raw materials and semi-manufactures recorded a moderate decrease, mainly due to the fall in intake of electronic parts and components earlier in the year (Chart 7).

Chart 7

Hong Kong's visible trade (year-on-year rate of change in real terms)

Per cent

20

15

10

5

0

-5

-10

Total exports of goods

Domestic exports

Re-exports

Imports of goods

-15

1995 1996

1997 1998 1999 2000 2001 2002 2003 2004 2005

Merchandise exports performed well again in 2005. Apart from the strong growth in re-exports, domestic exports picked up further. As did imports.

With the increase in the value of exports of goods exceeding that of imports, the visible trade deficit reckoned on a GDP basis narrowed in absolute terms, to $59.3 billion or 2.6 per cent of the value of imports of goods in 2005, from $72.5 billion or 3.5 per cent in 2004.

There was a substantial increase in invisible trade again with exports of services. growing by 8.7 per cent in real terms in 2005, following a strong increase of 17.9 per cent in 2004. Exports of trade-related services, including the offshore trade in particular, were boosted by the Mainland's strong trade flows. Exports of travel services also increased appreciably, albeit at a less rapid pace than in 2004, along with the further expansion of inbound tourism. The number of incoming visitors hit a new high of 23.4 million in 2005. Particularly noteworthy is that the number of long- haul visitors, who usually have higher per capita spending and longer length of stay, showed a greater increase in 2005. Robust external trade coupled with the growth in inbound tourism likewise benefited exports of transport services. The continued upturn in business together with a buoyant financial market, also served to support exports of finance, business and other services.