XN000022-1997-02-27 — Page 20

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FS forecasts a promising economic outlook for Hong Kong

The Financial Secretary, Mr Donald Tsang, said today (Thursday) Hong Kong would start life as a Special Administrative Region in sound economic shape, with every prospect of remaining the most attractive business location in the region.

Breaking with tradition, Mr Tsang has chosen to announce the economic forecasts for 1997 in advance of his Budget Speech, which he will deliver at the Legislative Council on March 12.

In his Budget Prelude Speech entitled "Hong Kong 1997 Economic Outlook" to the Hong Kong Investment Funds Association, Mr Tsang said: "I believe it is right to demonstrate as plainly as possible that market forces, not the annual budget, determine Hong Kong's economic performance."

In describing the economic outlook for 1997, Mr Tsang said he forecast GDP to grow by 5.5%.

"But let me emphasise that this figure is not a commitment, not even a target. It simply represents our best, objective estimate of how the Hong Kong economy will perform during the current year," he said.

"This would give us another year of solid economic performance, with growth very much in line with our medium-term forecast of 5%.

"This growth rate is about the right, sustainable level for our mature economy."

Mr Tsang expected the economy to perform better in foreign trade, and the growth rate of private consumption expenditure to pick up to 5.5%.

"Unemployment will remain low. Stronger earnings and a tighter labour market will boost consumer confidence. In addition, the recent boom in the property market will be a positive influence on consumer psychology," he said.

The growth rate for overall investment would slacken during 1997, Mr Tsang said. Gross Domestic Fixed Capital Formation is forecast to grow by 7.4%, with expenditure on building and construction rising by 5.8% and expenditure on machinery and equipment by 7.6%.

Mr Tsang expected that there would be a rebound in foreign trade in 1997.

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