XN000022-1990-05-25 — Page 5

IL

[PIDAY, MAY 25, 1990

"MOREOVER,

PROCESSING RE-EXPORTS

TREND OF DEVELOPMENT OF OUTWARD ACTIVITIES RESULTING IN MORE PRODUCTS BEING SHIPPED OUT AS RATHER THAN AS DOMESTIC EXPORTS SEEMED LIKELY TO CONTINUE, HE NOTED.

REFLECTING

FASTER GROWTH EXPECTED FROM RE-EXPORTS, THE FORECAST GROWTH BALZ IN REAL TERMS OF IMPORTS WAS ADJUSTED UPWARDS FROM 6.4 PER CENT TO 6.9 PER CENT.

AND

GIVEN AN IMPROVED OUTLOOK FOR TRADE-RELATED SERVICES AND TOURISM, THE FORECAST GROWTH RATES IN REAL TERMS OF EXPORTS AND IMPORTS OF SERVICES WERE ALSO RAISED MARGINALLY, TO 5.8 PER CENT 5.4 PER CENT RESPECTIVELY FROM THE EARLIER FORECASTS OF 5.5 PER AND 5 PER CENT.

IN

INCREASE RETAINED.

CENT

THE DOMESTIC SECTOR, THE BUDGET FORECAST OF A 3.5 PER CENT IN REAL TERMS IN PRIVATE CONSUMPTION EXPENDITURE WAS

ON CAPITAL FORMATION, THE FORECAST GROWTH RATE IN REAL TERMS OF PRIVATE SECTOR EXPENDITURE ON BUILDING AND CONSTRUCTION WAS RAISED FROM 0.5 PER CENT TO 1 PER CENT, AS WORK ON SOME PRIVATE SECTOR PROJECTS WAS EXPECTED TO GATHER MOMENTUM IN THE LATTER PART OF THE YEAR.

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"AS A RESULT, THE DECLINE IN REAL ESTATE DEVELOPERS MARGIN WAS ALSO EXPECTED ΤΟ BE SMALLER THAN WAS ENVISAGED EARLIER, THE GOVERNMENT ECONOMIST SAID.

"ON THE OTHER HAND, PARTLY BECAUSE OF CAPACITY CONSTRAINTS IN THE CONSTRUCTION INDUSTRY, THE FORECAST GROWTH RATE IN REAL TERMS OF PUBLIC SECTOR EXPENDITURE ON BUILDING AND CONSTRUCTION WAS REDUCED FROM 15 PER CENT TO 12 PER CENT, HE SAID.

..

AS REGARDS EXPENDITURE ON PLANT AND MACHINERY, THE FORECAST GROWTH RATE WAS KEPT AT AROUND 3 PER CENT IN REAL TERMS.

"TAKING THESE COMPONENTS TOGETHER, THE FORECAST GROWTH RATE OF GROSS DOMESTIC FIXED CAPITAL FORMATION WAS LITTLE CHANGED, AT AROUND 2 PER CENT IN REAL TERMS," MR TANG SAID.

ON INFLATION, THE RECENT SPATE OF INCREASE IN FEES AND MAY HAVE LED TO SUGGESTIONS FOR A SMALL UPWARD REVISION FORECAST RATE OF INCREASE IN THE CPI(A) FOR 1990, BY SAY HALF PERCENTAGE POINT.

IN

CHARGES THE OF A

HOWEVER, A NUMBER OF FACTORS ARE CONDUCIVE то A FURTHER MODERATION IN THE RATE OF INFLATION. THESE INCLUDE :

* MODEST GROWTH IN THE ECONOMY;

* INDICATIONS OF FURTHER EASING IN LABOUR MARKET CONDITIONS AND

OF LESS RAPID INCREASE IN WAGES AND SALARIES THAN LAST YEAR;

/* A SOFTENING