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Trading in the local stock market had turned more active since the beginning of 1996, with daily turnover in the first half of 1996 averaged at $5 billion, 52% higher than that in 1995. The Hang Seng Index closed the month of June at 11,020, 947 points or 9.4% higher than at end-1995.
Updated forecasts
GDP and price forecasts for 1996 have been reviewed by individual components. The updated forecasts are summarised in the table annexed.
In the external sector, total exports of goods are forecast to grow by 6.5% in real terms in 1996, as compared to the increase of 9.8% forecast earlier. Within this total, the forecast growth rate in real terms of re-exports in 1996 is lowered to 9%, from 12% in the earlier forecast; and that of domestic exports to -5.5%, from 0% in the earlier forecast.
These downward revisions basically reflect the poor export performance in the first half of 1996, particularly the second quarter.
A better export growth is nevertheless envisaged for the second half of 1996. The unfavourable exchange rate effect arising from a stronger US dollar is expected to dissipate gradually.
Import demand in the United States is expected to revive, after going through the inventory adjustment in the early part of this year.
The glut in the global electronics market may have less of an effect on Hong Kong than on those economies where their exports are more concentrated in such products.
The strong import demand in the United Kingdom and Japan should be sustained, while import demand in Germany is also likely to improve. As to China, robust consumer demand in the country should continue to underpin the respective imports.
The setback in China's imports of material inputs and capital equipment in the early part of this year will probably be followed by some revival in the latter part, as the effects of the various tax and tariff measures gradually settle.
The forecast growth rate in real terms of imports of goods in 1996 is likewise revised downwards, to 5.7%, from 7.6% in the earlier forecast. This is largely in recognition of the slower growth in re-exports and the decline in retained imports in the first half of this year.
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