HONG KONG MONETARY AUTHORITY Annual Report 1996
HONG KONG MONETARY AUTHORITY
Commemorative coin issue
To commemorate the establishment of the Hong Kong Special Administrative Region on 1 July 1997, the HKMA, on behalf of the Government, will issue a gold coin, a proof set and a brilliant uncirculated set of seven newly designed coins with the same denomination as the present circulation coins.
The HKMA is also preparing to issue a philatelic numismatic cover in May 1997,the first of its kind in Hong Kong, to mark the opening of the Lantau Link.The Lantau Link is the first road link between the Lantau Island where the new airport is located, and the rest of Hong Kong.
OUTLOOK FOR THE ECONOMY
FORECAST 5.5% GDP GROWTH
The Government budget for 1997/98 projects another year of surplus in 1997 with the Hong Kong economy gaining further momentum. With continued buoyant fixed capital formation, sustained recovery in consumer spending and stronger exports, the economic growth will be more broadly based than 1996. Real GDP is forecast to grow by 5.5% in 1997.
EXPORTS SET TO GROW
Looking ahead, exports are expected to grow faster in the coming months, on stronger overseas demand stemming from the anticipated economic expansion in the OECD countries and within the Asia region. In particular, US import demand shows signs of revival, as inventory replenishment takes place. At the same time, Hong Kong's exports should also benefit from stronger China exports and the progressive reduction of import tariffs in China. The conclusion of a new Sino-US textile agreement in early 1997 also augured well for trade prospects, which should benefit Hong Kong.
The expansion of domestic exports will continue to be modest given the on-going relocation of Hong Kong's manufacturing base to mainland China. However, as this will increase investment income, Hong Kong's current account will not necessarily be adversely affected. Likewise, while the shift from re-exports to trans-shipment and direct shipment will dampen somewhat the pace of Hong Kong's export growth, the negative impact on the merchandise trade account will be partly offset by the rise in exports of services associated with increasing offshore trading.
INFLATION MAY EDGE UP SLIGHTLY
Inflationary pressure is expected to accelerate slightly in 1997. Higher consumption demand and the gradual tightening of the labour market could exert more upward pressure on inflation, while the surge in residential property prices may spill over to higher rents. Nevertheless, price increases are expected to be contained by Hong Kong's prudent fiscal policy, continued moderate inflation in Hong Kong's major trading partners and the strength of the US dollar. Inflation is therefore expected to be contained at the 7% level in 1997.