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The forecast growth rate in real terms of expenditure on machinery and equipment in 1996 is maintained at 8.6%. Intensive work on the major infrastructural projects, revival in building activity generally, and the on-going trend of office automation and production mechanisation should continue to underpin investment spending on machinery and equipment.
Overall, the forecast growth rate in real terms of GDP for 1996 is maintained at 5%. For the rest of the year, a stronger growth momentum is envisaged for the domestic sector, complementing a steady growth in exports of both goods and services.
On inflation, CPI(A) is forecast to increase by an average of 7.5% in 1996, same as the March forecast. The average rate of increase in CPI(A) recorded for the first four months of 1996 was 6.5%. Thus prima facie, there appears to be scope for a downward adjustment in the forecast.
Domestically-generated inflationary pressures from labour cost and rentals are expected to remain relatively moderate. Imported inflation should also be contained in the short term, given the current strength of the US dollar and the lower inflation in China.
However, in anticipation of a gradual pick-up in economic activity over the course of 1996, and in view of the bottoming out in world commodity and product prices in recent months, the tendency for further moderation in inflation will probably be reduced in the latter part of the year. It is hence considered prudent to keep the forecast of consumer price inflation unchanged.
The First Quarter Economic Report 1996 is now on sale at $30 per copy at the Government Publications Centre, ground floor, Lower Block. Queensway Government Offices.