XN000022-1984-02-29 — Page 4

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WEDNESDAY, FEBRUARY 29, 1984

SIR JOHN SAID THAT GIVEN THE STRONG EXPORT PERFORMANCE ACHIEVED IN 1983 AND EXPECTED IN 1984, EARNINGS INCLUDING WAGES SHOULD RISE IN REAL TERMS. THE FORECAST GROWTH FOR PRIVATE CONSUMPTION EXPENDITURE IN 1984 WAS SEVEN PER CENT.

+GOVERNMENT CONSUMPTION EXPENDITURE IS FORECAST TO INCREASE BY FIVE PER CENT, COMPARED WITH FOUR PER CENT IN 1983, HE SAID.

PRIVATE INVESTMENT EXPENDITURE, WHICH FELL BY EIGHT PER CENT LAST YEAR, WOULD PARTICULARLY BE DIFFICULT TO FORECAST, HE SAID. BUT THE ECONOMIC RECOVERY, WHICH BEGAN IN 1983 AND WAS EXPECTED TO CONTINUE THIS YEAR, SHOULD INDICATE A STRONG RECOVERY IN PRIVATE SECTOR INVESTMENT EXPENDITURE, WHICH, HOWEVER, THE CONTINUED UNCERTAINTY AND THE OVERHANG OF VACANT PREMISES IN THE PROPERTY SECTOR TENDED TO OFFSET.

HE SAID THAT IN PARTICULAR, PRIVATE SECTOR BUILDING INTENTIONS, WHICH DECLINED BY 24 PER CENT IN 1982, FELL BY ANOTHER 30 PER CENT LAST YEAR, INDICATING LITTLE SCOPE FOR POSITIVE GROWTH IN PRIVATE BUILDING AND CONSTRUCTION EXPENDITURE.

BUT, SIR JOHN ADDED, THERE WERE WELCOME SIGNS OF A REVIVAL IN PRIVATE INVESTMENT IN PLANT AND MACHINERY TOWARDS THE END OF LAST YEAR.

HE SAID THAT PRIVATE INVESTMENT IN BUILDING AND CONSTRUCTION WAS THUS FORECAST TO DECLINE BY TWO PER CENT THIS YEAR, AGAINST A DECLINE OF 13 PER CENT IN 1983.

TAKING THE PRIVATE AND PUBLIC SECTORS TOGETHER, OVERALL INVESTMENT IN PLANT AND MACHINERY WAS FORECAST TO INCREASE BY SIX PER CENT, AGAINST MINUS-ONE PER CENT LAST YEAR.

THESE FORECASTS, WHEN COMBINED WITH A FORECAST OF NINE PER CENT FOR PUBLIC SECTOR EXPENDITURE ON BUILDING AND CONSTRUCTION (WITH GROWTH COMING PRIMARILY FROM THE MASS TRANSIT RAILWAY CORP) AND FORECASTS OF SOME OTHER, SMALLER COMPONENTS, WOULD GIVE

A FORECAST GROWTH RATE FOR GROSS DOMESTIC FIXED CAPITAL FORMATION FOR 1984 OF THREE PER CENT AGAINST MINUS-SEVEN PER CENT FOR 1983, HE SAID.

SIR JOHN SAID THAT THE FORECAST GROWTH RATE OF IMPORTS ASSOCIATED WITH THESE FORECASTS OF FINAL DEMAND WAS 11 PER CENT, ONLY SLIGHTLY HIGHER THAN LAST YEAR'S OUTCOME OF 10 PER CENT.

+NET EXPORTS OF SERVICES ARE FORECAST TO INCREASE AT TWO PER CENT, COMPARED WITH A DECLINE OF EIGHT PER CENT IN 1983.+

HE SAID THAT THE COMBINATION OF THESE FORECASTS FOR THE INDIVIDUAL COMPONENTS OF EXPENDITURE WOULD GIVE A GROWTH FORECAST FOR GROSS DOMESTIC PRODUCT OF SLIGHTLY ABOVE SIX PER CENT.

IF THESE FORECASTS WERE BORNE OUT, HE SAID, ECONOMIC GRO.T¬ IN 1984 WOULD CONTINUE TO BE EXPORT-LED, BUT WITH AN INCREASING CONTRIBUTION FROM DOMESTIC DEMAND. AND, HE ADDED, THE GROWTH RATE OF TOTAL FINAL DEMAND, EXCLUDING RE-EXPORTS, WAS EXPECTEL AT SEVEN PER CENT, TO EXCEED THAT OF GROSS DOMESTIC PRODUCT, AT SIX PER CENT, BUT NOT SUFFICIENTLY TO GENERATE SIGNIFICANT INTERVAL INFLATIONARY PRESSURES.

/AID