TNAG-2977-FCO40-1469-Economic-policy-in-Hong-Kong-1982 — Page 91

G.F. 326

CONFIDENTIAL # 3

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22.

The slowing down in the growth rate of private

consumption expenditure, which started in the beginning of

1981, has continued into this year, probably due to poor

export performance affecting incomes and to the

unfavourable influence on wealth of a depressed stock

market. This is consistent with the deceleration in the

growth rate of retained imports of consumer

consumer goods in the

first half of this year.

Nevertheless though private

consumption expenditure is forecast to be less buoyant, it

should continue to show positive growth. The forecast

growth rate in real terms is revised downwards to 3% from

the budget forecast of 7%.

23.

Public sector demand on building and construction

output is forecast to remain strong as a result of the

continuation of the public works programme, the housing

programme and the construction of the MTR Island Line. As

some slowing down in private sector activity is expected,

overall expenditure on building and construction in real

terms is forecast to grow by 13% in 1982, only slightly

lower than the budget forecast of 15%. Similarly as a

result of an expected decline in private sector investment

intentions and in view of the forecast decline in retained

imports of capital goods this year, the forecast growth

rate of overall expenditure on plant, machinery

equipment in real terms is revised downwards from 14% to

-5%. Taking gross domestic fixed capital formation as a

and

CONFIDENTIAL