XN000022-1993-11-26 — Page 8

FRIDAY, NOVEMBER 26, 1993

IT THEN SETTLED SOMEWHAT, BEFORE REBOUNDING TO A NEW RECORD HIGH OF 7,676 ON SEPTEMBER 30. THIS WAS UP BY 8.1% OVER THE END OF JUNE 1993, AND BY 39.3% OVER THE END OF DECEMBER 1992.

CONSUMER PRICE INFLATION REMAINED GENERALLY STABLE DURING THIRD QUARTER OF 1993.

THE

THE YEAR-ON-YEAR RATE OF INCREASE IN THE CONSUMER PRICE INDEX (A) DECELERATED FROM 8.8% IN THE FIRST QUARTER TO 8.2% IN THE SECOND QUARTER, AND STAYED AT 8.2% IN THE THIRD QUARTER.

FOR THE FIRST NINE MONTIIS OF 1993 AS A INCREASED BY 8.4% OVER THE SAME PERIOD IN 1992.

WHOLE, THE CPI (A)

THE CORRESPONDING INCREASES IN THE CPI(B), HANG SENG CPI AND COMPOSITE CPI WERE 8.8%, 9.4% AND 8.8%.

ROSE

MEASURING INFLATION ON A BROADER BASIS, THE GDP DEFLATOR BY 9.4% IN THE SECOND QUARTER OVER A YEAR EARLIER, SLIGHTLY LOWER THAN THE 9.5% RISE RECORDED IN THE FIRST QUARTER.

THE RELATIVELY RAPID INCREASE IN THE GDP DEFLATOR WAS MAINLY A RESULT OF IMPROVEMENT IN THE TERMS OF TRADE.

IN FACT, FOR MOST GDP COMPONENTS, THE INCREASES IN THEİR PRICE DEFLATORS WERE MORE MODERATE THAN IN THE CPI(A).

SPECIFICALLY, THE DOMESTIC DEMAND DEFLATOR ROSE BY ONLY 6% IN

THE SECOND QUARTER OVER A YEAR EARLIER.

THE GOVERNMENT ECONOMIST SAID THE GDP AND PRICE FORECASTS FOR 1993 WERE REVIEWED BY INDIVIDUAL COMPONENTS HAVING REGARD TO THESE RECENT DEVELOPMENTS AND THE IMMINENT OUTLOOK. THE UPDATED FORECASTS ARE SUMMARISED IN THE FOLLOWING TABLE.

IN THE EXTERNAL SECTOR, THE FORECAST GROWTH RATE IN REAL TERMS OF RE-EXPORTS IN 1993 IS REVISED DOWNWARDS FROM 22% TO 20%, MAINLY то TAKE INTO ACCOUNT THE LATEST SLOW-DOWN IN RE-EXPORTS то THE MAJOR OVERSEAS MARKETS IN NORTH AMERICA AND CONTINENTAL EUROPE.

A MORE MODERATE GROWTH IN RE-EXPORTS TO CHINA IS ALSO EXPECTED. CONCEIVABLY, THIS IS PARTLY DUE TO THE DAMPENING EFFECT OF THE WEAKER DEMAND OVERSEAS ON OUTWARD PROCESSING ACTIVITIES ACROSS THE BORDER, AND PARTLY DUE TO CHINA'S RESTRAINT MEASURES WHICH COULD HAVE SOME EFFECT ON IMPORTS FOR ITS OWN CONSUMPTION.

ON THE PERFORMANCE OF DOMESTIC EXPORTS, IT WILL CONTINUE TO BE AFFECTED BY THE SLACK DEMAND IN THE MAJOR OVERSEAS MARKETS, THE SHIFT IN THE COMPOSITION OF HONG KONG'S EXPORTS TOWARDS MORE RE-EXPORTS, AND THE RELEVANT EXCHANGE RATE MOVEMENTS.

DOMESTIC EXPORTS ΤΟ CHINA FOR OUTWARD PROCESSING · ARE EXPECTED TO SHOW SLOWER GROWTH.

AS A RESULT, THE FORECAST RATE OF DECLINE IN REAL TERMS EXPORTS IN 1993 IS ADJUSTED FURTHER DOWNWARDS, FROM 1.5%

DOMESTIC

ALSO

IN

TO

5%.

/TAKING RE-EXPORTS