IT'S about time someone took a good hard look at why Hong Kong's economy appears to be headed southwards if its gross domestic product is so strong. According to the latest figures, Hong Kong's GDP surged to 5.9 per cent in the first quarter of 1995, but its unemployment rate also climbed to 3.2 per cent, the highest in 10 years. Retail sales are slumping and overall demand is ebbing. On the face of it, it seems ludicrous that more attention has not been paid to the external factors affecting Hong Kong. Exports and imports of services are as crucial to an entrepot like Hong Kong as the number of factories being opened or closed in the New Territories. Gross national product measures at least have the virtue of having an offshore component - GNP includes GDP plus income earned by residents outside Hong Kong (excluding income earned in Hong Kong but owed to someone outside Hong Kong). As Standard Chartered says, in any year when import prices rise faster than export prices, the purchasing power of Hong Kong's real income 'in terms of how much imports the territory can buy, will fall. 'Thus real income growth will be lower than real GDP in that year,' it said. 'Conversely, if export prices rise faster than import prices, real income will rise faster than real GDP.' Before 1994, Hong Kong's export prices rose faster than import prices. But the situation was reversed in 1994 and early 1995, it said, so Hong Kong companies have had to absorb higher import prices, and could not pass them on in terms of higher export prices. Standard Chartered's latest edition of Hong Kong Economic Indicators makes an interesting case. 'Applying the terms of trade concept to Hong Kong's real GDP numbers show that Hong Kong's economy grew by an average of 8.3 per cent during 1991 to 1993, and actually slowed to 3.6 per cent in the first quarter of 1995,' it said. In contrast, GDP numbers show a growth rate of 5.9 per cent for 1991 to 1993, 5.4 per cent in 1994, and 5.9 per cent in the first quarter of 1995. 'Clearly, the adjusted numbers reflect better the changes in business conditions in Hong Kong over the past few years,' the bank said. Clearly.