Bear with me here. Next we shall take an average of these quarter on quarter growth rates over the 15 years to the end of 2002 to construct an average year for the Hong Kong economy. We shall also treat the third quarter as the beginning of the year in order to present a post-Sars picture of what is happening.

You now have the red bars in the bar chart. They say that the third quarter is normally the highest growth period of the year. Things then slow down in the fourth quarter and the first quarter normally shows less economic activity than the fourth quarter.

This is because of various effects of the Lunar New Year holiday and our foreign trade is at its slowest in the first quarter with the Christmas shipping season having ended. Things then pick up again in the second quarter.

Now look at the blue bars to see what happened over the past 12 months. The third quarter last year immediately after the Sars scare ended was a banner one. In fact, you have to go back almost 30 years to find any quarter that showed a higher growth rate over the previous quarter. The fourth-quarter growth rate was also much better than usual.

But then you come to the first quarter this year and there was nothing exceptional in the change over the previous quarter. The same holds true in that second quarter this year for which the figures have just been reported. In fact, the quarter on quarter growth rate was actually slightly lower than the long-term average.

What we had here was a very big recovery in the second half of last year with things now back to normal again, which you knew anyway. That much ballyhooed 12.1 per cent year on year growth rate tells you only about the past. You are looking at the hole you climbed out of, not the level ground on which you again stand.

But let us look at some comparisons with that hole as not all the components of our economy have come out of it. The table shows some of these.

In foreign trade, our net exports of services show a big lift over the second quarter of last year but net exports of goods show a greater deficit. Add the two together and net foreign trade did not contribute much to that 12.1 per cent growth. On the consumption side of the economy we also spent less on food in the second quarter than we did a year before. Perhaps Sars induced us to savour special culinary delights at home last year.

But we certainly bought more consumer durables than we did a year before and, being much readier to travel than we were during Sars, we certainly spent a great deal more abroad. The recovery in spending by visitors here, however, was much greater again, which again should not surprise when you consider how steeply visitor arrivals fell during Sars.

On the investment side of the economy, the recovery was due entirely to a 27.6 per cent increase in purchases of machinery and equipment. Take those out of the figures and a 13.2 per cent year over year growth rate in gross fixed capital formation drops to a negative 1.7 per cent.

Note here that the recovery in the property market has not yet produced a recovery in private building construction. We actually built 10.1 per cent less during the booming second quarter of this year than during Sars.

The property market activity was entirely confined to buying and selling property, not building it. The cost of ownership transfers was 111.3 per cent more than a year before.

And if this mismatch in property activity suggests to you that one sector of our economy could stumble across another hole at some point, well, you may just be right.