54
THE ECONOMY
On a year-on-year comparison, PCE leaped by 8.7 per cent in real terms in the first quarter of 2000, and maintained notable growth at 5.0 per cent and 5.6 per cent respectively in the second and third quarters, before slowing to a 2.8 per cent increase in the fourth quarter. On a seasonally adjusted quarter-to-quarter comparison, PCE advanced to a 4.9 per cent increase in real terms in the first quarter of 2000, but eased back to a 0.2 per cent decline in the second quarter. It then picked up to a 0.5 per cent increase in the third quarter, but was down again by 2.9 per cent in the fourth quarter.
Government consumption expenditure (GCE) reckoned on a national accounts basis grew by 2.1 per cent in real terms in 2000, following a growth of 3.3 per cent in 1999. On a year-on-year comparison, GCE was up by 3.7 per cent, 2.7 per cent and 2.5 per cent respectively in real terms in the first three quarters, before registering a 0.6 per cent decline in the fourth quarter. On a seasonally adjusted quarter-to-quarter comparison, GCE fell only in the second quarter, by 2.8 per cent in real terms, and rose by 0.9 per cent, 0.7 per cent and 0.6 per cent respectively in the first, third and fourth quarters.
Overall investment spending picked up to an 8.8 per cent growth in real terms in 2000, reversing the decline of 17.4 per cent in 1999. The turnaround in overall investment spending in 2000 was driven predominantly by the strong upsurge in machinery and equipment acquisition, upon the improved corporate profits and business outlook. Expenditure on machinery and equipment surged by 24.6 per cent in real terms in 2000, in stark contrast to an 18.9 per cent drop in 1999.
Chart 9
Main components of domestic demand (year-on-year rate of change in real terms)
Investment expenditure in terms of gross domestic fixed capital formation
Per cent
20
15
10
5
0
-5
-10
-15
-20
1990
1991 1992 1993 1994 1995
Private consumption expenditure
1996
1997
Government
consumption
expenditure
1998
1999
2000
In 2000, local consumer spending revived more visibly on the back of increased employment and higher real labour income. Overall investment spending also resumed a notable growth, amidst improved corporate profits and business outlook. Meanwhile, government consumption expenditure maintained a modest growth.