XN000022-1991-05-24 — Page 8

FRIDAY, MAY 24, 1991

THE GROWTH RATE IN REAL TERMS OF RE-EXPORTS IS EXPECTED TO REMAIN UNCHANGED AT 15%. CONTINUED EXPANSION IN OUTWARD PROCESSING ACTIVITIES, AN IMPROVED DEMAND IN IMPORTS TO CHINA, AND CHINA'S EXPORT DRIVE ARE THE MAIN FACTORS UNDERLYING THIS FORECAST.

OWN

HOWEVER, THERE IS UNCERTAINTY OVER CHINA'S MOST FAVOURED NATION (MFN) STATUS IN THE UNITED STATES.

"IF IT WERE RESCINDED OR RENEWED WITH STRINGENT CONDITIONS AFFECTING US-CHINA TRADE, THERE WOULD BE A SIGNIFICANT ADVERSE IMPACT ON BOTH RE-EXPORTS OF CHINA ORIGIN AND RE-EXPORTS TO CHINA, AND HENCE ON HONG KONG'S OVERALL RE-EXPORTS TRADE, MR TANG SAID.

་་

IMPORTS, GOODS REMAINS

"GIVEN THIS FORECAST FOR RE-EXPORTS AND FOR RETAINED THE FORECAST GROWTH RATE IN REAL TERMS OF IMPORTS OF UNCHANGED, AT 10.7%, MR TANG SAID.

THE DEMAND

INCREASE IN LINE

|

FOR TRADE-RELATED

SERVICES SHOULD CONTINUE то

WITH THE GROWTH IN OVERALL TRADE.

HOWEVER, THE GROWTH IN TOURIST RECEIPTS IS LIKELY TO SLOW DOWN SOMEWHAT, MAINLY REFLECTING THE MARKED DECLINE IN THE FIRST QUARTER OF THIS YEAR.

AS A RESULT, THE FORECAST GROWTH RATE IN REAL TERMS OF EXPORTS OF SERVICES IS LOWERED FROM 6% TO 5%.

MEANWHILE, THE FORECAST GROWTH RATE IN REAL TERMS OF IMPORTS OF SERVICES IS RAISED FROM 7% ΤΟ 7.5%, TAKING INTO ACCOUNT THE SIGNIFICANT INCREASE IN EXPENDITURE OF HONG KONG RESIDENTS TRAVELLING ABROAD IN THE FIRST QUARTER.

H

"WITH THESE DIFFERENTIAL RATES OF INCREASE, A DECLINE IN NET EXPORTS OF SERVICES IS FORECAST FOR THE YEAR AS A WHOLE, MRTANG SAID.

IN THE DOMESTIC SECTOR, HAVING REGARD TO THE POSSIBLE DAMPENING EFFECT OF THE CURRENT HIGH INFLATION RATE ON CONSUMER DEMAND, AND THE EXPECTED LESS RAPID INCREASE IN WAGES AND SALARIES IN THE NEAR FUTURE, CONSUMPTION EXPENDITURE PROBABLY WILL NOT RISE SIGNIFICANTLY IN 1991.

"HOWEVER, THE HIGH TAKE-UP RATE OF RESIDENTIAL FLATS WILL LEAD ADDITIONAL SPENDING ON DURABLE GOODS AND HENCE OFFSET SOME OF THE NEGATIVE EFFECTS ON OTHER CONSUMPTION ITEMS.

TO

"THE FORECAST GROWTH RATE IN REAL TERMS OF PRIVATE EXPENDITURE IS THUS KEPT UNCHANGED AT 3.5%, MR TANG SAID.

"ON

CONSUMPTION

THE OTHER HAND, THE FORECAST GROWTH RATE IN REAL TERMS OF GROSS DOMESTIC FIXED CAPITAL FORMATION IS RAISED FROM 4.6% ΤΟ 5.7%, MAINLY REFLECTING THE LARGER INCREASE IN PRIVATE SECTOR EXPENDITURE ON BUILDING AND CONSTRUCTION AS WELL AS ON PLANT AND MACHINERY," MR TANG SAID.

THE FORECAST GROWTH RATES OF GOVERNMENT CONSUMPTION EXPENDITURE, AND OF PUBLIC SECTOR EXPENDITURE ON BUILDING AND CONSTRUCTION AND ON PLANT AND MACHINERY ARE UNCHANGED.

/ON INFLATION,