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strong export growth (see Table C.2). The iron and steel industry has
relatively poor prospects. Exports of iron and steel are expected to grow
slowly (Table C.2) and domestic sales adversely affected by continuation
of trends against the use of iron and steel as intermediate inputs. The
industries producing simply transformed metal products have mixed
prospects in the forecast period. Those with close connections to
construction and motor vehicles have poor prospects, while others such as
sheet metal products have good prospects due, in part, to an assumption
that trends in technology favouring their use as intermediate inputs
will continue.
Overall, the sector’s output is forecast to grow at an average annual rate
of 3.5 per cent. Productivity growth of about 1.5 per cent is expected,
leaving an average annual rate of growth of employment of 2.0 per cent.
Wholesale and retail trade (ranked 6)
Wholesale and retail trade have above-average prospects in the forecasts.
Wholesale trade is used intensively in facilitation export and imports.
With international trade growing rapidly (see Table C.1) one would
expect to see projected growth for the wholesale industry well above that
of GDP. However, the industry is held back slightly by an economy-wide
technological shift away from the use of wholesale trade for
facilitating transactions.
Among the 22 sectors, wholesale and retail trade ranks second in
employment prospects. Relatively slow growth in the industry’s capital
stock is expected, reflecting a relatively low ratio of investment to capital
in the initial year (1997–98). This leads to a forecast of relatively slow
productivity growth which, in combination with a forecast of strong
output growth, generates a forecast of strong employment growth.
Chemicals, petroleum and coal products (ranked 7)
Factors underlying the forecast of good growth prospects for this
sector are:
• strong export growth, especially important for basic chemicals, paints
and pharmaceutical goods;
• shifts in technologies favouring the use of the sector’s products
(e.g. more intensive use of chemical fertilisers in agriculture);
• a shift in consumer preferences favouring greater use of
pharmaceutical goods, and cosmetics; and
• and rapid productivity growth, which allows it to compete effectively
with imports.
Strong productivity growth reduces the sector’s employment ranking
below its output ranking. While its output prospect is ranked seventh, its
employment prospects are ranked tenth, with an average annual growth
rate in employment of 1.4 per cent.
Health, education and welfare (ranked 8)
Despite slow growth in public consumption (see Table C.1), Health,
education and welfare (ranked 8) has above-average growth prospects in
the forecasts. This is because it has been assumed that the sector will
increase its share of public spending in line with recent trends.
The forecast of employment growth in the sector implies productivity
growth of 0.7 per cent a year. Low productivity growth results from the
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