XN000022-1990-08-24 — Page 6

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FRIDAY, AUGUST 24, 1990

"IN GENERAL, THE CONTINUED DEVELOPMENT OF OUTWARD PROCESSING ACTIVITIES SHOULD RESULT IN A FURTHER SHIFT IN THE COMPOSITION OF HONG KONG'S EXPORT TRADE FROM DOMESTIC EXPORTS TO RE-EXPORTS, HE SAID.

"THE FORECAST GROWTH RATE IN REAL TERMS OF RE-EXPORTS IS THUS RAISED FROM 9 PER CENT TO 11 PER CENT, WHILE THAT OF DOMESTIC EXPORTS IS REDUCED FROM 2 PER CENT TO 0.5 PER CENT," MR TANG SAID.

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"THE FORECAST GROWTH RATE IN REAL TERMS OF IMPORTS IS RAISED SLIGHTLY TO 7.2 PER CENT, MAINLY DUE TO THE GROWTH IN RE-EXPORTS, HE ADDED.

"THE DEMAND FOR TRADE-RELATED SERVICES SHOULD CONTINUE TO GROW, IN LINE WITH THE OVERALL GROWTH IN EXTERNAL TRADE," MR TANG SAID.

"MOREOVER, BOTH INWARD AND OUTWARD TOURISM ARE EXPECTED TO PICK UP FURTHER IN THE LATTER PART OF THE YEAR, HE SAID.

"HENCE THE FORECAST GROWTH RATE IN REAL TERMS OF EXPORTS SERVICES IS RAISED FROM 5.8 PER CENT TO 6 PER CENT, AND THAT IMPORTS OF SERVICES FROM 5.4 PER CENT TO 7.5 PER CENT, HE SAID.

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"GIVEN THE DIFFERENTIAL GROWTH RATES, ONLY A SMALL INCREASE IN EXPORTS LESS IMPORTS OF SERVICES IS FORECAST FOR THE YEAR AS A WHOLE, THE GOVERNMENT ECONOMIST SAID.

"IN THE DOMESTIC SECTOR, THE FORECAST GROWTH RATE IN REAL TERMS OF PRIVATE CONSUMPTION EXPENDITURE IS MAINTAINED AT 3.5 PER CENT, LARGELY SUPPORTED BY AN INCREASE IN DEMAND FOR SERVICES, HE SAID.

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"THE FORECAST GROWTH RATE IN REAL TERMS OF GROSS DOMESTIC FIXED CAPITAL FORMATION IS, HOWEVER, LOWERED FROM 2.1 PER CENT TO 1.5 PER CENT, REFLECTING THE SLOWER GROWTH EXPECTED FOR EXPENDITURE ON PLANT AND MACHINERY, MR TANG SAID.

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"MEANWHILE, EXPENDITURE ON BUILDING AND

CONSTRUCTION SHOULD

STILL SHOW SIGNIFICANT GROWTH, AS WORK ON PUBLIC SECTOR PROJECTS REMAINS INTENSIVE," HE NOTED.

TURNING TO INFLATION, MR TANG SAID THE SINGLE MOST IMPORTANT QUESTION AT THE MOMENT CONCERNED THE OIL PRICE HIKE ARISING FROM THE GULF CRISIS.

"AS A CONSEQUENCE, CONSUMERS WILL HAVE TO PAY HIGHER PRICES BOTH FOR THE OIL-BASED FUELS THEY USE AND FOR THE FINISHED PRODUCTS INVOLVING OIL-BASED FUELS AS INPUT, HE POINTED OUT.

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**IN THE LONGER RUN, IMPORTED GOODS ARE ALSO LIKELY TO BECOME EXPENSIVE AS FOREIGN SUPPLIERS PASS ON THE EFFECT OF THE HIGHER

OIL PRICES.

"THE OVERALL EFFECT ON THE CONSUMER PRICE INDEX (A) FROM THE OIL PRICE INCREASE SO FAR IS ESTIMATED TO BE A RISE OF AROUND PERCENTAGE POINT.

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