ENG-2009 — Page 107

The Economy | 59

slight inflation, thanks to the economic recovery. In the international markets, food and oil prices showed renewed increases during the year, driven partly by a weaker US dollar.

Many other Asian economies also saw a return to inflation in the latter part of the year. The Composite Consumer Price Index (Composite CPI) increased by a modest 0.5 per cent in 2009, much slower than the 4.3 per cent increase in 2008. Netting out the effects of the Government's one-off relief measures, underlying consumer price inflation in 2009 was 1 per cent, also markedly lower than 5.6 per cent in 2008.

As a broad measure of the overall change in prices of the economy, the GDP deflator rose only slightly by 0.2 per cent in 2009, slower than the 1.5 per cent increase in 2008. The moderation was due mainly to the significant easing in local inflationary pressures during 2009. For the year as a whole, there was a marginal improvement in terms of trade, as import prices eased off slightly faster than export prices. Taking out the external trade component, the domestic demand deflator went down more visibly in the first quarter of 2009 before gradually rising once. more along with the concurrent upturn in local demand (Chart 17).

Chart 17

Per cent

8

6

Main Inflation Indicators (year-on-year rate of change)

Composite CPI

4

2

0

-2

GDP deflator

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2005

2006

Q2 Q3 Q4 Q1 Q2 Q3 Q4

2007 1 2008 1 2009

Consumer price inflation came down distinctly in the first half of 2009, dipping to the negative region for several months, before reverting to a slight positive level at year-end.

Public Finance

Structure of Government Accounts

The Government controls its finances through the General Revenue Account and funds. The General Revenue Account is the main account for day-to-day departmental expenditure and revenue collection. Funds are established by