XN000022-1995-05-26 — Page 11

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While work on the various major infrastructural projects has been progressing well, delay in the conclusion of the relevant financial support agreements for the Airport Core Programme could mean a somewhat slower growth in this area of expenditure for the year as a whole.

Taking the private and public sectors together, the forecast growth rate in real terms of total expenditure on building and construction is lowered from 14.9% to 9.9%.

The forecast growth rate in real terms of expenditure on machinery and equipment is raised to 14%, from the earlier forecast of 10%.

This has given regard to the further accelerated increase in investment spending by the private sector in recent months, as well as the substantial capital outlays on fittings and equipment expected for the new airport.

Combining the relevant components, gross domestic fixed capital formation in 1995 is forecast to grow by 10.1% in real terms, virtually the same as the earlier forecast of a 10.2% increase.

Overall, the forecast growth rate in real terms of GDP for 1995 is maintained at 5.5%. The faster growth envisaged for exports and expenditure on machinery and equipment should be able to compensate the slower growth envisaged for consumer spending and building and construction.

On inflation, the forecast rate of increase in the CPI(A) for 1995 is revised upwards by 0.5 of a percentage point to 9.0%. This has taken into account the higher actual outturn of 9.5% in the first four months of the year.

Consumer prices in the coming months will continue to be affected by higher import prices amidst a weakened Hong Kong dollar, faster increases in world commodity and product prices, and the high inflation in China.

Nevertheless, in regard to domestically-generated inflation, there are indications that market rentals of private housing and shopping space have eased somewhat.

Charges for meals at restaurants and the prices of various consumer services also tend to moderate along with the slackening in consumer demand.

The recent easing in the labour market should also help to alleviate the pressure on local resources in due course.