XN000022-1994-11-25 — Page 9

7

FRIDAY, NOVEMBER 25, 1994

ON

INVESTMENT SPENDING, EXPENDITURE ON BUILDING AND CONSTRUCTION BY THE PUBLIC SECTOR IS FORECAST TO GROW BY 26% IN REAL TERMS IN 1994, WHILE THAT BY THE PRIVATE SECTOR IS FORECAST TO GROW BY 13% IN REAL TERMS. THESE FORECASTS HAVE TAKEN INTO ACCOUNT THE OUTTURN IN THE FIRST HALF OF THE YEAR. PARTICULARLY THE MARKED ACCELERATION IN PRIVATE SECTOR CONSTRUCTION ACTIVITY DURING THE PERIOD. TAKING BOTH SECTORS TOGETHER, OVERALL EXPENDITURE ON BUILDING AND CONSTRUCTION IS FORECAST TO GROW BY AROUND 18% IN REAL TERMS IN 1994, UP FROM THE EARLIER FORECAST OF AROUND

15%.

INFRASTRUCTURAL PROJECTS ARE THE MAIN CONSTITUENT OF THIS ROBUST GROWTH. AS TO EXPENDITURE ON MACHINERY AND EQUIPMENT, THE FORECAST GROWTH RATE IN REAL TERMS IN 1994 IS ALSO RAISED, FROM 5.8% TO 10.6%, MAINLY IN THE LIGHT OF THE SHARP INCREASE IN RETAINED IMPORTS OF CAPITAL GOODS IN RECENT QUARTERS. COMBINING ALL RELEVANT COMPONENTS, GROSS DOMESTIC FIXED CAPITAL FORMATION IN 1994 IS FORECAST TO GROW BY ABOUT 11% IN REAL TERMS.

IS

OVERALL, THE GROWTH RATE IN REAL TERMS OF THE GDP IN 1994 FORECAST AT 5.7%, SAME AS IN THE AUGUST UPDATE. THE IMPROVED PERFORMANCE OF DOMESTIC EXPORTS AND FASTER CAPITAL FORMATION LOCALLY ARE EXPECTED TO BE OFFSET BY INCREASED ABSORPTION OF IMPORTS, GIVEN THE CAPACITY CONSTRAINTS IN THE ECONOMY. THE FORECAST ALSO EMBRACES A SIGNIFICANT REPLENISHMENT OF STOCKS TO MAKE UP FOR A LARGE DEPLETION OF STOCKS APPARENT IN THE LATTER PART OF LAST YEAR.

IS

THE

ON

ON INFLATION, THE FORECAST RATE OF INCREASE IN THE CPI (A) REVISED DOWNWARDS TO 8%, WHILE THAT IN THE GDP DEFLATOR IS KEPT UNCHANGED AT 8%. THE DOWNWARD ADJUSTMENT IN THE CPI FORECAST HAS GIVEN REGARD TO THE ACTUAL INFLATION LEVEL SO FAR THIS YEAR. PRICES OF FOODSTUFFS, WHICH HAVE THE HEAVIEST WEIGHTING IN THE CPI(A), ARE EXPECTED TO REMAIN GENERALLY STABLE FOR THE REST OF THE YEAR. THE OTHER HAND, DOMESTICALLY GENERATED INFLATIONARY PRESSURES CONTINUE TO AFFECT HOUSING RENTALS, TRANSPORT FARES, AND CHARGES VARIOUS CONSUMER SERVICES.

IMPORT PRICES ARE EXPECTED TO FACE GREATER UPWARD PRESSURES THEREBY AFFECTING THE PRICES OF SUCH ITEMS AS CLOTHING. THUS NOTWITHSTANDING THE DOWNWARD ADJUSTMENT IN THE FORECAST, CONSUMER PRICE INFLATION IS LIKELY TO STAY RELATIVELY HIGH.

ALSO,

WILL FOR

THE THIRD QUARTER ECONOMIC REPORT 1994 IS NOW ON SALE AT THE PUBLICATIONS, CENTRE IN CONNAUGHT PLACE, CENTRAL AT $52 A

GOVERNMENT COPY.

/FORECAST FOR