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Moreover, buoyancy in the residential property market should induce more private sector building activity.
The Public Housing Programme is keeping up with its momentum. Work on the ACP should remain intensive in the near term. Public sector investment in ACP-related machinery and equipment is also expected to remain strong for some time. On the other hand, private sector investment in machinery and equipment seems likely to consolidate further, after the marked increases for almost two and a half
years.
On exports, the following factors should support growth in the last quarter of the year:
While the US dollar has remained generally strong, it seems to have stabilised in recent months. The earlier and stronger adverse exchange rate effect on Hong Kong's export performance will tend to be alleviated.
Import demand in the United States has shown signs of revival in the third quarter, suggesting that the inventory adjustment since the early part of this year is probably nearing completion. As to the other major overseas markets, import demand is expected to hold generally steady.
Consumer demand in China has remained strong, supported by sustained rapid economic growth and rise in household income. Exports from China have also picked up in recent months. These together should uphold China's imports of consumer goods for domestic consumption, as well as material inputs and capital equipment for outward processing.
Tourism has remained robust, and the growth momentum is expected to carry beyond the end of 1996. This, coupled with continued increases in offshore trading as well as in exports of financial and other professional and business services, should contribute to a further growth in overall exports of services.
There has been little price pressure from imported inflation, given the relative strength of the US dollar and continued low inflation in the major supplier economies like China, Japan and the United States. Domestic inflationary pressures have also been subdued, given a more balanced situation in the local labour market and generally more stable rentals in the property market. Taking into account the outturn in the first ten months of the year, with consumer price inflation as measured by the CPI(A) averaged at 5.9%, the forecast inflation rate for 1996 as a whole is lowered further to 6.0%, from the August update of 6.8%.