XN000022-1985-09-23 — Page 7

MONDAY, SEPTEMBER 23, 1985

SIR JOHN ALSO REVISED: PRIVATE CONSUMPTION EXPENDITURE IN REAL TERMS SLIGHTLY DOWNWARDS TO SIX PER CENT FROM SEVEN PER CENT, AND FORECAST PRIVATE SECTOR EXPENDITURE ON BUILDING AND CONSTRUCTION TO GROW BY AN INCREASED FIVE PER CENT IN REAL TERMS, AGAINST A BUDGET FORECAST OF TWO PER CENT, AND PRIVATE SECTOR INVESTMENT IN PLANT AND MACHINERY TO GROW AT SEVEN PER CENT, BELOW THE BUDGET FORECAST OF 16 PER CENT.

AS FOR PUBLIC SECTOR EXPENDITURE ON BUILDING AND CONSTRUCTION, HE SAID THAT, GIVEN THE COMPLETION OF A MAJOR PART OF THE MTR ISLAND LINE PROJECT AND A NUMBER OF MAJOR CAPITAL WORKS PROJECTS BY THE GOVERNMENT, HE FORECAST A DECLINE BY 16 PER CENT IN REAL TERMS, COMPARED WITH THE BUDGET FORECAST OF A DECLINE OF EIGHT PER CENT. PUBLIC SECTOR EXPENDITURE ON PLANT AND MACHINERY WAS FORECAST TO DECLINE BY 15 PER CENT IN REAL TERMS.

+THUS, TAKING GROSS DOMESTIC FIXED CAPITAL FORMATION AS A WHOLE, THE FORECAST GROWTH RATE IN REAL TERMS IS THREE PER CENT, AS COMPARED WITH THE BUDGET FORECAST OF FIVE PER CENT, HE SAID.

CONSISTENT WITH THE ABOVE REVISIONS, HE SAID, THE FORECAST GROWTH RATE IN REAL TERMS OF IMPORTS WAS ALSO REVISED DOWNWARDS TO 11 PER CENT.

+ THE NET RESULT OF THE ABOVE REVISIONS IS TO REDUCE THE FORECAST GROWTH RATE IN REAL TERMS OF THE GDP IN 1985 TO 4.5 PER CENT TO FIVE PER CENT, FROM THE BUDGET FORECAST OF ABOUT SEVEN PER CENT AND THE ACHIEVED GROWTH RATE OF NINE PER CENT IN 1984.

+THIS IS DISAPPOINTING BUT HARDLY DRAMATIC. OTHERS WHO WILL ENVY US, + HE SAID.

THERE ARE MANY

THE REVISED FORECAST OF EXPENDITURE ON THE GDP IN 1985 WAS THUS $188 BILLION AT CONSTANT (1980) PRICES. WITH A FORECAST INCREASE IN THE GDP DEFLATOR OF SEVEN PER CENT, THE REVISED FORECAST OF EXPENDITURE ON THE GDP AT CURRENT PRICES WAS $278 BILLION,

IN PER CAPITA TERMS 1985 GDP AT CURRENT PRICES WAS FORECAST TO BE ABOUT $51 280 (OR U.S.$6 570), REPRESENTING AN ANNUAL GROWTH RATE OF 10 PER CENT IN MONEY TERMS OR THREE PER CENT IN REAL TERMS.

DUE PARTLY TO THE SLOWER GROWTH RATE OF OUTPUT, HIS FORECAST FOR THE INCREASE IN THE CONSUMER PRICE INDEX (A) WAS REVISED DOWNWARDS FROM 5.5 PER CENT TO FOUR PER CENT.

SIR JOHN SAID THAT ECONOMIC GROWTH IN 1985 WOULD CONTINUE TO BE EXPORT-LED, WITH MOST OF THE IMPETUS COMING FROM THE STRONG GROWTH IN RE-EXPORTS.

WITHIN DOMESTIC