1996 half yearly economic report and updated forecasts
In the August update of the economic forecasts for 1996, the overall gross domestic product (GDP) is forecast to grow by 4.7% in real terms. This is slightly below the growth rate of 5% forecast earlier, but at par with the growth rate attained last year.
The forecast of consumer price inflation, as measured by the consumer price index (CPI)(A), is also lowered, from 7.5% to 6.8%.
The downward adjustment in the forecast GDP growth rate for the year mainly reflects the further slow-down in export growth in the first half of 1996, which was more abrupt than initially expected and led directly to weaker overall economic growth in the period.
Total exports rose by only 4% in real terms in the first half of this year, in contrast to a 10% growth in the second half of last year. The GDP growth rate touched a low of 3.1% in real terms in the first quarter.
Nevertheless, preliminary indications are that the GDP growth rate rebounded in the second quarter. It is forecast to pick up further in the next two quarters.
Moreover, economic fundamentals have been turning better:
*
The
Labour market conditions improved further in recent months. seasonally adjusted unemployment rate for the three months ending July fell below the 3%
mark for the first time in 14 months, while the underemployment rate also moved lower. Total employment maintained a solid growth.
Consumer price inflation in the first half of 1996 was considerably below the level prevailing in 1995.
The visible trade deficit has been narrowing, and is well offset by sustained healthy increase in the invisible trade surplus.
Activity in both the stock and property markets has revived markedly from last year, and the banking sector has performed remarkably well.
Close economic relations continue to develop with China, currently the most dynamic economy in the region.