XN000022-1992-08-28 — Page 7

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FRIDAY, AUGUST 28, 1992

AS THE CURRENT TREND OF INVESTMENT IN MACHINERY AND

EQUIPMENT IS STRONGER THAN INITIALLY EXPECTED, THE FORECAST GROWTH RATE IN REAL TERMS OF PRIVATE SECTOR EXPENDITURE ON MACHINERY AND EQUIPMENT IS REVISED UPWARDS FROM 10% TO 14%. BY CONTRAST, THE FORECAST GROWTH RATE IN REAL TERMS OF EXPENDITURE ON BUILDING AND CONSTRUCTION IS REVISED DOWNWARDS, FROM 6.1% TO 2.6%, HAVING REGARD TO THE CURRENT SLACK IN BUILDING AND CONSTRUCTION ACTIVITY.

YEAR,

OF

WHILE PUBLIC SECTOR EXPENDITURE ON BUILDING AND CONSTRUCTION HAS ALREADY BEEN SHOWING CONSIDERABLE UNDERSPENDING SO FAR THIS THE REDUCTION IN BUILDING CONSENTS SINCE 1991 AND THE WINDING DOWN A NUMBER OF MAJOR PROJECTS SUGGEST THAT PRIVATE SECTOR EXPENDITURE BUILDING AND CONSTRUCTION COULD ALSO SLACKEN IN THE SHORT TERM.

OVERALL,

MAINTAINED AT 5%.

ON

THE FORECAST GROWTH RATE IN REAL TERMS OF THE GDP IS

GIVEN THE CAPACITY CONSTRAINTS IN THE LOCAL ECONOMY, THE RAPID INCREASES IN SOME OF THE FINAL DEMAND COMPONENTS ARE BEING SUPPORTED TO A CONSIDERABLE EXTENT BY GREATER IMPORTS, AS DISTINCT FROM LOCAL SUPPLY.

ON CONSUMER PRICE INFLATION, THE FORECAST RATE OF INCREASE IN THE CPI(A) FOR 1992 AS A WHOLE 18 MAINTAINED AT 9.5%. THIS HAS TAKEN INTO ACCOUNT THE ACTUAL INFLATION RATE AND THE MODERATING TREND IN THE FIRST SEVEN MONTHS OF THE YEAR.

SUSTAINED INVESTMENT IN MACHINERY AND EQUIPMENT AND THE ARRIVAL OF FOREIGN WORKERS UNDER THE 1992 LABOUR IMPORTATION SCHEME SHOULD ENABLE THE PRODUCTIVE CAPACITY OF THE ECONOMY TO BE EXPANDED TO MEET THE PRESSURE OF DEMAND.

MOREOVER, THE GENERALLY STABLE WORLD COMMODITY PRICES SHOULD HELP TO RESTRAIN THE INCREASE IN IMPORT PRICES. THEREBY KEEPING IMPORTED INFLATION AT A LOW LEVEL NOTWITHSTANDING THE RECENT MOVEMENT OF THE US DOLLAR.

THE FORECAST RATE OF INCREASE IN THE GDP DEFLATOR, AS A MEASURE OF OVERALL INFLATION IN THE ECONOMY, IS ALSO KEPT UNCHANGED AT 9.5%.

THE HALF-YEARLY ECONOMIC REPORT 1992 WILL BE ON SALE ON AUGUST 28, 1992 AT THE GOVERNMENT PUBLICATIONS SALES CENTRE IN CONNAUGHT PLACE, CENTRAL, AT $30 A COPY.

/FORECAST