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products. For the same reasons Hong Kong's
re-exports to China are expected to grow more
slowly.
15.
Domestic demand is expected to remain
robust for most of the year but would eventually
be restrained by the slower growth in exports.
A number of factors are expected to provide
support in the short term, including the
increase in consumption expenditure brought
about by higher incomes, continued investment in
machinery and equipment in response to the tight
labour market conditions, intensive building and
construction activity, and the fast expanding
service sectors. Thus, domestic demand is
expected to provide a relatively greater impetus
to overall economic growth in 1989 than was
envisaged in the earlier forecast.
16.
Inflationary pressures are expected to
be sustained for a while before easing, probably
towards the end of the year as a result of a
continued moderation in economic activity.
Currently, excess demand in the economy is the
main source of such inflationary pressures.
addition, generally higher inflation in the
world economy, not least higher prices of basic
In
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