XN000022-1988-09-13 — Page 4

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TUESDAY, SEPTEMBER 13, 1988

I AM CONFIDENT THAT OUR SECURITIES INDUSTRY WILL BE READY, ONCE AGAIN, TO TAKE UP THE CHALLENGES PRESENTED AND THE OPPORTUNITIES OFFERED BY A RAPIDLY DEVELOPING GLOBAL MARKET-PLACE, HE SAID.

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ON THE CURRENT STATE OF THE HONG KONG ECONOMY, MR JACOBS NOTED THAT HE SAW NO NEED TO REVISE HIS BUDGET FORECASTS SUBSTANTIALLY, EXCEPT AS REGARDS THE GROWTH RATE OF RE-EXPORTS, AND THUS

GROWTH RATES OF TOTAL EXPORTS AND IMPORTS, AND TO A LESSER EXTENT THE GROWTH RATES OF INVESTMENT IN PLANT AND MACHINERY AND OF NFT EXPORTS OF SERVICES.

'ACCORDINGLY, MY FORECAST OF THE GROWTHI RATE OF DOMESTIC EXPORTS FOR 1988 REMAINS AT SIX PER CENT, WHILE THE FORFCAST GROWTH RATE OF RE-EXPORTS IS RAISED SUBSTANTIALLY TO 35 PER CENT. AS A RESULT, TOTAL EXPORTS ARE NOW FORECAST TO GROW BY 20 PER CENT," HE SAID.

ON INVESTMENT, MR JACOBS SAID THE FORECAST GROWTI! RATE OF EXPENDITURE ON PLANT AND MACHINERY WAS REVISED UPWARDS TO 11 PER CENT, IN LINE WITH CONTINUED INCREASES IN RETAINED IMPORTS OF PLANT AND MACHINERY DURING THE YEAR.

THUS THE STRONG PERFORMANCE SEEN IN INVESTMENT IN PLANT AND MACHINERY IN THE PAST TWO YEARS WAS CONTINUING.

HOWEVER, HE ADDED, IN THE BUILDING AND CONSTRUCTION SECTOR, CAPACITY REMAINED A SERIOUS FACTOR LIMITING THE GROWTH OF OUTPUT AND BECAUSE OF THIS THE FORECAST GROWTH RATE OF EXPENDITURE ON BUILDING AND CONSTRUCTION WAS LOWERED TO THREE PER CENT.

OVERALL, MR JACOBS SAID, THE REVISED FORECAST FOR THE GROWTH RATE FOR THE GDP IN 1988 WAS SIX PER CENT, SLIGHTLY HIGHER THAN THE FIVE PER CENT FORECAST HE MADE IN HIS RUDGET SPEECH IN MARCIL.

MR JACOBS POINTED OUT THAT ALTHOUGH THIS GROWTH HATF WAS CONSIDERABLY SLOWER THAN THAT ACHIEVED IN 1986 AND 1987. 1T WOULD STILL MEAN THAT THE ECONOMY HAD GROWN AT AN AVERAGE OF ABOUT 10 PER CENT PER ANNUM FOR THREE YEARS.

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HE SAID THIS WAS AN ENVIABLE RECORD BY ANY STANDARDS, ANY EVENT, FOLLOWING TWO YEARS OF EXCEPTIONAL GROWTH, THE ECONOMY REQUIRES A PERIOD OF CONSOLIDATION".

WITH THIS SLOWER GROWTH RATE, MR JACOBS SAID, BOTH THE TIGHT LABOUR MARKET AND INFLATIONARY PRESSURES SHOULD FASE IN DUR COURSE, ALTHOUGH POSSIBLY NOT DURING THIS YEAR.

"OUR LABOUR FORCE SHOULD STILL BE FULLY RMPLOYED AFRAID THAT IN THE SHORT TERM THERE MAY WELL BE A FURTHER EDGING OF THE INFLATION RATE BEFORE IT RETURNS TO MORE ACCEPTABLE LEVELS.

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