65
Reply:
The Government's current Medium Range Forecast regarding the trend growth rate in real terms of the GDP over the four financial years up to the year 1998-99 remains at 5% per annum.
Although the recent performance of the Hong Kong economy was not as good as in the past few years, in overall terms the economy still recorded a growth rate in excess of 5% in the first half of this year. The slack consumer spending has retarded overall economic performance. On the other hand, it is noteworthy that exports of both goods and services have continued to show robust growth. The current investment sentiment is also firm. We forecast the GDP to grow by 5% this year.
Looking ahead into the medium term, the external environment supporting Hong Kong's export performance can be expected to be sustained, along with continuing trade liberalisation globally, dynamic growth in the Asia-Pacific region, as well as strong economic development in China. As exports have all along been providing the key impetus to Hong Kong's overall economic growth and income increase, this favourable external setting should be able to underpin a trend GDP growth rate of 5%, which is also within the productive capacity of the economy to
cope.
In the short term, it is not unusual for the economy to be faced with certain fluctuations. The medium-term GDP forecast abstracts from these fluctuations and focuses on the trend, in view of its usage primarily for budgetary planning purposes. However, being in itself a forecast rather than an economic growth target, and bearing in mind that the Hong Kong economy is driven predominantly by the private sector rather than by government directives or actions, it is beyond the Government's powers to guarantee or ensure that this particular growth rate will be achieved in all circumstances. Nor is it appropriate to expect that the Government should even attempt to do so. An assessment of the medium-term economic outlook nevertheless suggests that this forecast is a reasonable and prudent one.
End/Wednesday, November 8, 1995