XN000022-1996-03-06 — Page 38

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He noted that in the Asia-Pacific region, growth continued to be dynamic, trade liberalisation was gathering momentum although the annual threat to China's most-favoured-nation status in the US market was still a "cloud on the horizon".

He also noted that the APEC initiatives on trade liberalisation were now winning wider support and was of the opinion that a key objective of China's Ninth Five Year Plan to ensure steady growth and to keep inflation in check would provide a solid foundation for the continuing healthy development of Hong Kong's trade and other economic links with China.

Overall, Mr Tsang forecast the total exports of goods to grow this year by ten per cent in real terms; a growth of only 0.5 per cent in domestic exports but a 12 per cent growth in re-exports, and for exports of services, continued robust growth also at ten per cent in real terms.

He expected that overall, the surplus on invisible trade would be enough to offset the deficit on visible trade.

Turning to the domestic economy, Mr Tsang said the business prospects also looked favourable with wages and salaries rising more moderately, and property prices and rentals unlikely to rebound sharply.

He anticipated that together with the recent substantial investment in machinery and equipment, all this promised well for holding down the costs of doing business and enhancing Hong Kong's competitiveness.

On domestic consumption; his forecast was for an accelerated growth in consumer spending to four per cent in real terms for 1996 as a whole, with probably a stronger pick-up in the second half of the year.

Consumer sentiment is expected to turn better following the rebound in both the stock and the property markets, to be helped further by the recent easing in interest

rates.

fixed asset On domestic investment Mr Tsang forecast the growth in investment to be slightly less rapid than last year, at around six per cent in real terms.

He expected that construction work on our Airport Core Programme would peak this year, while private sector building activity was to bottom out while on the other hand. expenditure on machinery and equipment was likely to rise at a more moderate pace after two consecutive years of substantial growth.

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