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An active property market should boost private sector building activity on the one hand, and generate a greater demand for fitting out and interior decoration work on the other.
There is likely to be a further strong increase in public sector investment in machinery and equipment, reflecting in large part the intake for the Airport Core Programme.
Continued easing in both domestically-generally inflationary pressures and imported inflation has contributed to the distinctly lower inflation so far this year.
The modest increase in food prices, coupled with the alleviating effect on labour cost and rentals brought about by the earlier consolidation in the labour and property markets, largely accounted for this favourable outturn.
If the inflation situation continues to be stable, there is scope for lowering the forecast inflation rate further later in the year.
DETAILS
The external sector
Hong Kong's export performance was rather volatile in the first half of 1996. After showing notable increases in the first two months of 1996, exports took a marked downturn in March, then picked up sharply in April, but turned weaker again in both May and June.
Taking the first half of 1996 as a whole, total exports rose by only about 4% in real terms over a year earlier. This represented a marked deceleration from the increases of 15% and 10% in the first and second halves of 1995.
Within total exports, re-exports rose by about 7% in real terms, while domestic exports fell by about 9% in real terms in the first half of 1996 over a year earlier.
The main factors underlying the deceleration in export growth were: the strengthening of the Hong Kong dollar along with the US dollar after the second quarter of 1995 thereby reducing the competitiveness of Hong Kong's exports in the world market; the slow-down in import demand in the United States and China; the heightening of tension across the Taiwan Strait; the continued structural shift from re- exports to offshore trading; and not least the substantial export growth in the first half of last year giving a high base of comparison for the first half of this year.