The 4.5 per cent real growth in Gross Domestic Product (GDP) recorded in the local economy in the third quarter of the year continues the relatively robust recovery evident since the third quarter of last year.

But it should be remembered that this year¡¦s third quarter growth came off a low base last year, the 1998 third quarter (negative 6.9 per cent year-on-year growth) being the nadir of the Asian financial crisis-induced recession.

The outcome would also have been helped by the earlier revisions made to the previous GDP figures for 1998 and 1997 and contained in the Government¡¦s second quarter GDP report and providing a lower base for 1999 growth.

It must also be noted that overall deflation worsened in the third quarter of this year, meaning that in nominal, or current dollar terms, overall GDP would have still declined in the third quarter by some two per cent.

The Government¡¦s upgrading of forecast annual growth to a real 1.8 per cent from the previous 0.5 per cent was inevitable given the indications of positive real growth given by officials in recent months.

Arguably, the upgrading could have been done earlier except for the Government¡¦s normal caution in dealing with its own forecasts.

The Government is now predicting that deflation, as measured by the GDP deflator, to be 5 per cent for the full 1999 calendar year.

This means that nominal, or current dollar, GDP for the full year is expected to be in the negative, probably around three per cent.

The faster pace of positive real growth recorded in the third quarter of the year is nevertheless a strong sign that the economy is pulling out of recession along with, but more slowly than, the most of the rest of the Asian region.