XN000022-1996-08-30 — Page 6

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Analysed by major market, exports to Japan and the United Kingdom showed further strong increases in the first half of 1996. Exports to China and Germany however showed more moderate growth. Exports to the United States fell, having recorded virtually zero growth in the preceding six months.

Imports rose also by only about 4% in real terms in the first half of 1996 over a year earlier. This followed increases of 17% in the first half of 1995 and 11% in the second half.

Apart from mirroring the deceleration in re-export growth, the sharp slow-down in import growth was also attributable to a significant slackening in retained imports, which fell by about 2% in real terms in the first half of this year over a year earlier, having risen by 18% in the first half of last year and 8% in the second half.

The visible trade deficit narrowed to $84 billion (equivalent to 11.4% of the value of imports) in the first half of 1996, from $88 billion (12.4%) in the same period in 1995. Underlying this narrowing was an improvement in the terms of trade along with a stronger US dollar, as well as less retained imports amidst a process of inventory adjustment locally.

Domestic demand

Consumer spending showed signs of bottoming out in the first half of 1996. While spending on clothing and footwear and on other consumer non-durables continued to rise, spending on foodstuffs and consumer durables also revived to positive growth. In particular, sales of motor vehicles began to pick up in March, after 19 consecutive months of decline.

Investment spending should have attained a further notable growth in the first half of 1996. Work on the major infrastructural projects remained highly intensive, in particular with the Airport Core Programme progressing to its peak.

Output from the Public Housing Programme also showed a large increase, in line with the Government's move to build more public rental and Home Ownership Scheme/Private Sector Participation Scheme flats.

Meanwhile, as the property market revived, building work in the private sector showed a smaller decline in the first half of this year than in the earlier periods. Demand for fitting out and interior decoration work also strengthened again.