XN000022-1992-08-28 — Page 6

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FRIDAY, AUGUST 28, 1992

IN THE EXTERNAL SECTOR, THE FORECAST GROWTH RATE IN REAL

TERMS

OF DOMESTIC EXPORTS IS REVISED SLIGHTLY UPWARDS FROM 1% TO 1.5%, HAVING REGARD TO THE LATEST TREND AND TAKING INTO ACCOUNT THE SUSTAINED IMPROVEMENT IN THE ORDERS-ON-HAND POSITION AND THE STEADY GROWTH IN RETAINED IMPORTS OF RAW MATERIALS AND

SEMI-MANUFACTURES.

ALSO ENHANCE THE DOMESTIC EXPORTS TO SIGNIFICANT GROWTH,

THE RECENT EXCHANGE RATE MOVEMENTS SHOULD EXTERNAL COMPETITIVENESS OF HONG KONG'S PRODUCTS. CHINA, IN PARTICULAR, SHOULD CONTINUE TO SHOW SUPPORTED BY THE INCREASE IN CHINA'S IMPORTS FOR ITS OWN USE AND THE CONTINUED EXPANSION IN OUTWARD PROCESSING ACTIVITIES.

YEAR, THE

IN THE LIGHT OF THE FAVOURABLE OUTTURN SO FAR THIS FORECAST GROWTH RATE IN REAL TERMS OF RE-EXPORTS IS RAISED SLIGHTLY FURTHER, FROM 24% TO 25%. AS IT NOW STANDS, THE RENEWAL OF CHINA'S MFN STATUS IN THE UNITED STATES IN 1992 APPEARS FAIRLY SECURE.

OUTWARD PROCESSING ACTIVITIES CAN BE EXPECTED TO GROW FURTHER, THEREBY INCREASING RE-EXPORTS INVOLVING CHINA IN BOTH DIRECTIONS. THE : RAPID GROWTH IN CHINA'S IMPORTS FOR MEETING ITS OWN DEMAND ALSO UNDERPINS RE-EXPORTS TO CHINA. HOWEVER, THE MARKET ACCESS NEGOTIATIONS BETWEEN THE UNITED STATES AND CHINA UNDER SECTION 301 OF THE US TRADE ACT ARE GIVING RISE TO SOME UNCERTAINTY IN THE RE-EXPORT TRADE AND THIS IS A MATTER OF MUCH CURRENT CONCERN,

HAVING REGARD TO THE HIGHER GROWTH RATE OF RE-EXPORTS AND A FASTER INCREASE IN RETAINED IMPORTS FOR THE LOCAL ECONOMY, THE FORECAST GROWTH RATE IN REAL TERMS OF IMPORTS OF GOODS IS RAISED FROM 17.6% TO 19%.

WITH THE FASTER GROWTH IN TOTAL TRADE AND THE SIGNIFICANT REVIVAL IN TOURISM SO FAR THIS YEAR, THE FORECAST GROWTH RATES IN REAL TERMS OF EXPORTS OF SERVICES AND OF IMPORTS OF SERVICES ARE BOTH LIFTED, FROM 10% AND 9.5% TO 11% AND 10% RESPECTIVELY.

IN THE DOMESTIC SECTOR, THE FORECAST GROWTH RATE IN REAL TERMS OF PRIVATE CONSUMPTION EXPENDITURE IS REVISED UPWARDS FROM 7% TO 7.5%, MAINLY TO TAKE ACCOUNT OF THE SIGNIFICANT GROWTH ATTAINED IN THE FIRST HALF OF THIS YEAR.

FOR THE REST OF THE YEAR, A FURTHER STEADY INCREASE SUPPORTED BY HIGHER HOUSEHOLD INCOMES CAN BE EXPECTED. SPENDING ON DURABLE GOODS AND RESIDENTS' EXPENDITURE ABROAD ARE LIKELY TO INCREASE FASTER THAN EXPENDITURE ON OTHER CONSUMER ITEMS.

THE FORECAST GROWTH RATE IN REAL TERMS OF GOVERNMENT CONSUMPTION EXPENDITURE REMAINS UNCHANGED AT 6%.

TERMS MARGINALLY

AS REGARDS NVESTMENT, THE FORECAST GROWTH RATE IN REAL GROSS DOMESTIC FIXED CAPITAL FORMATION IS REVISED UPWARDS FROM 7.1% TO 7.2%.

OF

/AS THE