XN000022-1991-08-23 — Page 2

FRIDAY, AUGUST 23, 1991

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ECONOMIC SITUATION IN THE FIRST HALF OF 1991 AND UPDATED FORECASTS OF GDP AND PRICES FOR 1991

OF

HALF DOMESTIC

ECONOMIC ACTIVITY CONTINUED TO REVIVE IN THE FIRST 1991. THE PERFORMANCE OF RE-EXPORTS REMAINED ROBUST, WHILE EXPORTS RECORDED A MODERATE INCREASE, ACCORDING TO THE HALF-YEARLY ECONOMIC REPORT 1991 RELEASED TODAY ( (FRIDAY),

CONSUMPTION

LOCALLY, INVESTMENT DEMAND GREW SIGNIFICANTLY. DEMAND ALSO SHOWED A FAIR INCREASE. THE LABOUR MARKET EASED SOMEWHAT BUT INFLATION AT THE CONSUMER LEVEL WAS STILL HIGH.

THE

IN

GROSS DOMESTIC PRODUCT (GDP) GREW BY AN ESTIMATED 4.1% REAL TERMS IN THE FIRST QUARTER OF 1991 OVER A YEAR EARLIER, AND IS LIKELY TO HAVE INCREASED BY AROUND 4-4.5% IN THE SECOND QUARTER.

INFLATIONARY PRESSURES AT THE CONSUMER LEVEL INTENSIFIED DURING THE FIRST FOUR MONTHS OF 1991, PEAKING IN APRIL BEFORE MODERATING SOMEWHAT IN MAY AND JUNE.

THE PACKAGE OF COUNTER-INFLATION MEASURES ANNOUNCED BY THE GOVERNMENT IN MAY HAD SOME EFFECT. THE GDP DEFLATOR, AS A BROAD OVERALL MEASURE OF INFLATION IN THE ECONOMY, ROSE LESS RAPIDLY THAN THE CONSUMER PRICE INDICES.

THE GOVERNMENT ECONOMIST, MR K.Y. TANG SAID, ON THE BASIS OF THIS REPORT AND OTHER LATEST AVAILABLE INFORMATION, A REVIEW HAD BEEN MADE OF THE FORECASTS OF THE GROSS DOMESTIC PRODUCT (GDP) AND OF THE PRICE TRENDS FOR 1991.

"AS A RESULT OF THIS REVIEW, THE FORECAST GROWTH RATE IN REAL TERMS OF THE GDP IS REVISED UPWARD FROM 3.5% TO 4%. THE FORECAST RATE OF INCREASE IN THE CONSUMER PRICE INDEX (A) IS ALSO REVISED UPWARDS, FROM 11% TO 12%.

AS

"HOWEVER, THE FORECAST RATE OF INCREASE IN THE GDP DEFLATOR, A MEASURE OF OVERALL INFLATION IN THE ECONOMY, IS LOWERED FROM 9.5% TO 9%," HE SAID.

IN THE FIRST HALF OF 1991, DOMESTIC EXPORTS INCREASED BY ABOUT 2% IN REAL TERMS OVER A YEAR EARLIER.

"THE PICK-UP IN DOMESTIC EXPORTS IN RECENT QUARTERS WAS LARGELY ATTRIBUTABLE TO AN EARLIER IMPROVEMENT IN THE EXTERNAL COMPETITIVENESS OF HONG KONG'S PRODUCTS, DUE TO THE DEPRECIATION OF THE HONG KONG DOLLAR ALONG WITH THE US DOLLAR IN THE LATTER PART OF 1990 AND IN THE FIRST TWO MONTHS OF 1991, MR TANG SAID.

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THE PERFORMANCE OF DOMESTIC EXPORTS TO THE VARIOUS MAJOR MARKETS WAS MIXED. DOMESTIC EXPORTS TO THE FEDERAL REPUBLIC OF GERMANY AND CHINA RECORDED FURTHER SIGNIFICANT INCREASES, WHILE THOSE TO THE UNITED KINGDOM AND JAPAN ALSO PICKED UP.

/ON THE