3
4
5
far more important for our export-oriented economy are those with the rates of inflation in our principle markets and among our principle
competitors.
The average inflation forecast for the OECD countries in 1988 is 3.8
The Financial Secretary
Increases in wages and other production
67 6
per centy against 78 per cent for Hong Kong.
7
has also told us
us/
and I quote:
8
9
10
11
12
costs in 1987, which were faster than those of Hong Kong's competitors,
are likely to have an adverse affect on the competitiveness of Hong Kong's products in 1988.*
What worries me is not just the budget for the new fiscal year, but the Cap
13
way things are forecast to go over the period up to 1991-92.
14
15
16
17
18
19
20
21
22
23
24-
2.5
26
27
2 2 2 2
30
31
32
33
34
35
36
NP
cent
Let us just
la.
focus on the key indicators in the forecast. External demand is not likely to provide the main impetus for growth in 1988; Money supply has le been growing a good deal faster than GDP in each of the last three years; Inflation which rose from 2.8 per cent in 1986 to 5.5 per cent in 1987 and is forecast at 7 per cent for 1988, will nevertheless, average only 5.5 per cent over the forecast period; GDP is forecast to grow at an average of per cent; Consolidated account expenditure will rise from 4.6 per cent in 87-88 to 7 per cent and 6.5 per cent in the next two years, that is, faster than GDP; Consolidated account expenditure as a percentage of GDP will rise from 15 per cent in 87-88 to 16 per cent over the next two years; There is a 19 per cent increase in capital le expenditure budgetted for 88-89;
545
The growth in civil service establishment will rise from 3 per cent
4.5
in 87-88 to 4 per cent and then to per cent without ever getting down to the target figure of per cent throughout the forecast period;
2:3
stet
The share of consolidated account expenditure that goes on social services
48.5
will rise steadily reaching per cent in 1991-92-that is to say nearly half of total expenditure and this will only cover actual and planned commitments, without allowing for any new or improved services.
What do these indicators suggest? First, a number of them seem to me to
cap