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by capacity after several years of rapid
growth. The repercussions of the events in
China are also relevant. A consolidation in
economic activity at this stage should help to
reduce the risk of continuing high inflation.
16.
In the external sector, the forecast
growth rate in real terms of domestic exports
was lowered to 1.5%. Despite the generally
stable order-book position of the large
manufacturers, current information on retained
imports of raw materials and semi-manufactures
suggests that the performance of domestic
exports would remain sluggish in the next few
months. A slow-down in Hong Kong's domestic
exports to overseas markets would bring about a
concurrent slackening in those domestic exports
to China that are associated with outward
processing activities.
17.
The growth rate in real terms of
re-exports was forecast at 20%. In the coming
months, re-exports to China would continue to be
restrained by China's austerity measures and by
the slackening in outward processing
activities. On the other hand, the growth rate
of re-exports of China origin was expected to
remain substantial.
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