HONGKONG last year notched up its biggest trade deficit yet at $30.34 billion in a trend economists say will stunt economic growth in the territory unless the Government takes steps to increase or improve the workforce. Statistics released yesterday by the Government showed the overall trade deficit more than doubled the $13.09 billion shortfall posted in 1991 and was a 12-fold increase on the $2.66 billion deficit in 1990. The trend, which economists say is unlikely to be arrested in the near future, is a measure of strong consumer demand - elsewhere in the world, indicative of a healthy economy. Hongkong's difficulty lies in its inability to meet this demand with internal resources, mainly labour. When the territory's buyers channel their wealth into investments and shops, much of it ends up in pockets overseas. Bank of East Asia head of economic research Benjamin Chan Sau-san said: ''We've got strong domestic investment and consumption - at around eight per cent last year - but still register growth rates of around five per cent because of the large trade deficit. ''It's all to do with supply constraints. Unfortunately we don't have the resources to meet increasing demand. That will continue to be the trend because if we have the new airport, we will import more materials and labour, maintaining the trade deficit.'' Yesterday's figures highlighted Hongkong's role at the centre of a vibrant two-way re-export market. For the year as a whole, re-exports soared 29.2 per cent over 1991 to $690.83 billion. Thanks to a more modest improvement in domestic exports - up 1.3 per cent to $234.12 billion - total exports were pruned back to a still-robust growth rate of 20.8 per cent to $924.95 billion. For the same period, growth in imports outpaced that of total exports at 22.6 per cent. The total imports bill stood at $955.29 billion. Peregrine Brokerage senior economist Vincent Chan said the big deficit did not automatically sound alarm bells - in Hongkong's case, the good years show a deficit as strong demand must be met by similarly strong exports. ''The only year in the recent past we had a surplus was 1989, when GDP growth dropped to 1.3 per cent and 0.7 per cent in the third and fourth quarters after Tiananmen Square: the worst time for Hongkong in many years. ''The major reason is because we are fully-employed. Usually strong demand allows you to employ resources - which is good in places like the UK - but quite the reverse case here,'' he said. If the China boom continues, and the political heat over Hongkong cools down, economists said the territory would be able to maintain strong export growth but that this, married to equally resilient import growth, would not erode or reverse the deficit trend. Equally, they said, it would be difficult to break out of an economic growth rate of about five per cent, until either short-term solutions - such as importing labour - or medium-term solutions - such as retraining the workforce to increase productivity - were adopted. Mr Vincent Chan said: ''In other countries if consumption was growing at eight per cent, GDP would go to six to eight per cent, but in Hongkong we stick at five to 5.5 per cent because strong demand is compensated by similarly strong imports.'' He is looking for this year to provide another stable trade picture, with re-exports ploughing ahead at about 20 per cent - although warning that China's Most-Favoured Nation status could prove an economic bombshell, if the US chooses to play it tough. At the Bank of East Asia, Mr Benjamin Chan believes growth in total exports will top 20 per cent this year, with higher imports if the new airport project takes wing and triggers an overseas shopping trip for both materials and labour. The bank forecasts GDP growth of 5.2 per cent, based on 4.8 per cent growth in productivity and a slight 0.4 per cent improvement in employed persons. Mr Chan added that increased productivity was key to growth in the territory. South China Brokerage research director Law Cheung-kwok said the big-figure trade deficit would be less dramatic once service exports were stripped in - substantial revenue from so-called invisibles such as insurance and banking. He is looking for an even stronger push behind re-exports this year, forecasting growth of 27 to 30 per cent. He said: ''Even if President [Bill] Clinton's administration takes a more protective stance towards free trade, I don't think that would have much effect on Hongkong's re-export performance. ''Hongkong manufacturers have invested much more heavily in China in the last two years, so products should be coming out of these new joint ventures and the momentum for re-exports should continue.'' Trade figures for last month were marginally lower than boom months in the year, which can partially be attributed to an especially strong December 1991. Total exports for the month grew 14.9 per cent over December 1991 to $85.94 billion and imports were up 17.2 per cent to $90.23 billion.
