XN000022-1992-05-29 — Page 8

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FFIDAY, MAY 29, 1992

ASSUMING SATISFACTORY OUTCOMES FOR BOTH THE RENEWAL OF CHINA'S MFN STATUS IN THE UNITED STATES AND THE NEGOTIATIONS BETWEEN THE UNITED STATES AND CHINA UNDER SECTION 301 OF THE U.S. TRADE ACT, OUTWARD PROCESSING ACTIVITIES ACROSS THE BORDER SHOULD CONTINUE ΤΟ EXPAND AND BOOST HONG KONG'S RE-EXPORTS INVOLVING CHINA IN BOTH DIRECTIONS.

RE-EXPORTS TO CHINA FOR MEETING ITS OWN DEMAND ARE ALSO EXPECTED TO RISE FURTHER.

TAKING INTO ACCOUNT THE UPWARD REVISION IN THE FORECAST GROWTH RATE OF RE-EXPORTS AND A FASTER INCREASE IN RETAINED IMPORTS FOR MEETING LOCAL DEMAND, THE FORECAST GROWTH RATE OF IMPORTS OF GOODS IS RAISED FROM 14.9% TO 17.6%.

IN LINE WITH THE FASTER INCREASE IN EXPORT TRADE AND IN TOURIST RECEIPTS, THE FORECAST GROWTH RATE IN REAL TERMS OF EXPORTS OF SERVICES IS LIFTED FROM 8% TO 10%.

AS REGARDS IMPORTS OF SERVICES, THE FORECAST GROWTH RATE IS ALSO LIFTED FROM 8% TO 9.5%, HAVING REGARD TO THE SIGNIFICANT INCREASE IN EXPENDITURE OF HONG KONG RESIDENTS TRAVELLING ABROAD IN RECENT MONTHS.

IN THE DOMESTIC SECTOR, THE FORECAST GROWTH RATE OF PRIVATE CONSUMPTION EXPENDITURE IS REVISED UPWARDS FROM 6% TO 7%, IN VIEW OF THE BETTER-THAN-EXPECTED OUTTURN SO FAR THIS YEAR.

CONSUMER SPENDING IS LIKELY TO BE ORIENTED MORE TOWARDS DURABLE ITEMS AND TRAVELLING ABROAD.

THE FORECAST GROWTH RATE IN REAL TERMS OF GOVERNMENT CONSUMPTION EXPENDITURE IS REVISED UPWARDS FROM 4% TO 6%.

THIS REVISION IS MAINLY DUE ΤΟ THE RECLASSIFICATION OF EXPENDITURES PERTAINING то THE HOSPITAL AUTHORITY, WHICH FOR GDP ESTIMATION PURPOSES IS INCLUDED IN THE PUBLIC SECTOR.

ON THE OTHER HAND, THE FORECAST GROWTH RATE IN REAL TERMS OF GROSS DOMESTIC FIXED CAPITAL FORMATION IS REVISED DOWNWARDS FROM 8.2% TO 7.1% MAINLY REFLECTING THE CURRENT SLACK IN PRIVATE SECTOR BUILDING AND CONSTRUCTION ACTIVITY.

THE FORECAST GROWTH RATES OF PUBLIC SECTOR EXPENDITURE ON

BUILDING AND CONSTRUCTION

EQUIPMENT REMAIN UNCHANGED.

AND OF EXPENDITURE ON MACHINERY AND

TAKING ALL THESE COMPONENTS TOGETHER, THE FORECAST GROWTH RATE IN REAL TERMS OF THE GDP IS UNCHANGED, AT 5%.

THE FASTER INCREASE IN DOMESTIC DEMAND CAN BE SUPPORTED BY A MORE RAPID GROWTH IN RETAINED IMPORTS.

ON CONSUMER PRICE INFLATION, SEVERAL FACTORS ARE CONDUCIVE ΤΟ MODERATION. THE GOVERNMENT IN FORMULATING THE 1992-93 BUDGET HAS BEEN CAREFUL IN MINIMISING ITS IMPACT ON CONSUMER PRICES, EFFECT SLIGHTLY DEFLATIONARY.

AND THE NET

/WORLD COMMODITY