10.
In national
accounts terms, public sector expenditure recorded a growth of 1% in 1986, with the decline in government capital expenditure offset by an increase in consumption
expenditure (4).
11.
So, in 1986, we enjoyed buoyant private sector activity
led by a strong growth in exports. This resulted in a highly satisfactory overall economic performance. The growth rate of
the gross domestic product (GDP) in 1986 was slightly below 9%,
much higher than the growth rate in 1985 of around 1%, and just
below that achieved in 1984 (5). It is considerably better than
my own mid-year forecast. What we have seen is the result of a particularly good second half.
12.
With the revival in economic activity, both the
unemployment rate and the underemployment rate declined, to 2.2%
and 1.2% respectively in the fourth quarter. We normally regard any unemployment rate below 3.5% as effective full employment.
practically all sectors, happily including manufacturing,
employment
Earnings in most sectors increased
significantly in real terms, as the rapid increase in nominal
earnings was accompanied by only modest inflation.
In
(4)
(5)
rose.
Government expenditure in national accounts terms differs from that in the Consolidated Account. The major difference is that public sector expenditure in national accounts terms includes capital expenditure by public corporations (which is not included in the Consolidated Account) but excludes recurrent expenditure by Government trading departments, expenditure on land acquisitions and property purchases, recurrent and capital subventions, and welfare payments (all of which are included in the Consolidated Account and, of which, land acquisitions and property purchases in 1986-87 were the major sources of growth in this Account). Excluding capital expenditure by public corporations, public sector expenditure in national accounts terms increased by 3% in real terms. Further details of the difference are given in Appendix C.
The GDP growth rate for 1986 is a preliminary estimate, while that for 1985 is provisional.
4
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