The recovery process in the Hong Kong economy has gathered further momentum in the third quarter of 1999, a government report said.

A crude initial assessment suggests that the Gross Domestic Product should have attained a growth of around 4.5 percent in real terms in the third quarter over a year earlier, according to the government's third quarter economic report of 1999, which was published Friday.

On a seasonally adjusted quarter-to-quarter basis, GDP should have expanded further by around 2 percent in real terms in the third quarter, after rebounding to 3.1 percent growth in the second quarter, said the report, which described the economic situation in the third quarter of 1999 and provided updated GDP and price forecasts for the year.

Externally, exports of goods staged a significant upturn, driven by the sharp rebound in exports of China's mainland, a general pick-up in demand in the East Asian economies, as well as a broad strengthening in import absorption in the United States and Europe, the report said.

Exports of services likewise accelerated in growth, along with the regional economic recovery, it said, adding that the combined visible and invisible trade balance should have yielded a considerably larger surplus in the third quarter.

The report said that consumer spending picked up further, in tandem with the recovery in overall economic activity and with the employment situation holding generally stable.

On investment spending, it said, the decline in expenditure on machinery and equipment tended to taper, while public sector building and construction output bounced back to positive growth thereby providing a partial offset to the continued slack in private sector building activity.

The labor market held generally stable, and the seasonally adjusted unemployment rate in the third quarter of 1999 stood at 6. 1 percent while the underemployment rate was 3.1 percent, according to the report.

The stock market also consolidated in the third quarter, but regained strength in the latter part of October upon improved market sentiment, and rallied to new post-crisis highs in November upon China's accord with the United States on its accession to the World Trade Organization.

For 1999 as a whole, GDP is now forecast at a growth of 1.8 percent in real terms, up from 0.5 percent in the August round, the report said.

Looking ahead, the Hong Kong economy should continue to benefit from the revival of demand in East Asia, better economic conditions in Europe, and sustained import absorption in the United States, the report concluded. (Xinhua)