Wed, 22 Apr 2009
From: The Jakarta Globe
By Ardian Wibisono
Several domestic economic indicators in the first quarter were showing signs of bottoming out, three economists said, meaning the economy might not slump much further this year. Despite this, it was too soon to say whether the improvements were the “green shoots” of recovery or just a short-term respite, they said.

Giving a growth forecast for the first quarter, Mirza Adityaswara, Bank Mandiri’s chief economist, noted that several first-quarter indicators, such as sales of cars, motorcycles, housing, cement and heavy machinery, were beginning to stabilize or even pick up compared with the fourth quarter of last year.

“The conditions might indicate that we are bottoming, we might not be getting worse and we may have passed the worst,” Mirza told reporters on Tuesday.

The economy might improve slowly but I also worry that it could continue to be flat’

Mizra Adityaswara

“Ahead, the economy might improve slowly but I also worry that it could continue to be flat, which will mean a recovery will take a longer time.”

While she believed these signs were positive, Destry Damayanti, an economist with PT Mandiri Sekuritas, said the rallies in the rupiah and the Jakarta Composite Index in the past few weeks did not mean conditions in the real economy were getting better. Instead they reflected transitory investor sentiment, she said.

Chatib Basri, a senior adviser to the finance minister, echoed Mirza and said the first-quarter rise in retail sales, especially food and electricity consumption, showed the economy was performing better than had been earlier predicted.

Chatib said the country should remain cautious, as negative figures such as exports and imports could drag the overall economy down if they continued to fall.

“If exports continue to plunge, the indirect impact is consumption will weaken because of increased unemployment. Declining imports are also a bad thing because this reflects negative investment,” he said.

Chatib said despite domestic efforts to stimulate the economy through the speeding up of government spending and stimulus packages, global economic recovery would play a major part in any local improvement. He said if the US economy was to rebound then the domestic economy would surely follow.



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