Bank Indonesia sees third quarter growth at 4.4-4.9%<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The economy may have grown by as much as 4.9 percent in the third
\nquarter of this year, driven by strong domestic consumption and
\nan improvement in investment, Bank Indonesia said in its latest
\neconomic assessment.<\/p>\n
But while the third quarter growth estimate of between 4.4
\npercent and 4.9 percent is higher than the second quarter growth
\nof 4.32 percent, it is slightly lower than the initial projection
\nmade by the central bank in July, when it stated that third
\nquarter growth could reach as high as 5.1 percent.<\/p>\n
It did not provide an explanation for the lower estimate, but
\nrelatively strong inflation in July due to the weakening rupiah
\nmight have eaten into consumers' purchasing power, which in turn
\nputs downward pressure on consumption -- the main driver of
\ngrowth over the past few years.<\/p>\n
The central bank, however, noted in a statement issued late on
\nTuesday after its monthly board of governors meeting that despite
\nthe stronger growth in the third quarter, investment had not been
\nstrong enough to significantly boost economic capacity, and the
\neconomy was thus still heavily dependent on consumption as
\nexports performance remained sluggish as well.<\/p>\n
"The pattern for economic growth is not balanced, as shown by
\nthe high growth in private consumption," it said.<\/p>\n
The Central Statistics Agency is expected to announce the
\nofficial third quarter growth later this month.<\/p>\n
The government is targeting the economy to expand by 4.8
\npercent this year, betting on improvement in investment and
\nexports to support domestic consumption, which has remained
\nrobust mainly due to a lower interest rate environment.<\/p>\n
But the largest economy in the Southeast Asia region needs to
\ngrow by at least 6 percent to be able to absorb some 2 to 2.5
\nmillion of new workers annually, analysts have said.<\/p>\n
The statement said that domestic and foreign investment likely
\ngrew during that period at a range of 8.3 to 8.8 percent.<\/p>\n
More impressive was an improvement in foreign investment. The
\nlatest data from the Coordinating Investment Board (BPKM) said
\nthat foreign direct investment approvals had risen by 22 percent
\nin the January-September period to US$7.9 billion from a year
\nearlier.<\/p>\n
As for export performance, albeit slowly, it has managed to
\nincrease by 17 percent in August from the same period last year,
\npartly benefiting from the soaring oil prices, according to the
\nCentral Statistics Agency (BPS).<\/p>\n
The government has said it was counting on the revival of
\noffshore investment to accelerate the economic growth.<\/p>\n
The completion of a peaceful seven-month election process this
\nyear -- in which market-friendly Susilo Bambang Yudhoyono won the
\npresidential seat and has pledged to stamp out corruption and
\nboost the economy -- is expected to mark that revival.<\/p>\n
Going forward, the central bank said it expected the economy
\nthis year to grow at the upper end of the 4.5 to 5 percent range,
\nin line with its earlier forecast.<\/p>\n
Elsewhere, the central bank also predicted inflation would go
\nup heading by the end of the year, marked by religious
\nfestivities such as Ramadhan, Idul Fitri and Christmas.<\/p>\n
"Inflationary pressure will likely rise towards the end of
\n2004, mainly due to higher aggregate demand driven by seasonal
\nfactors ahead of religious events and the year-end celebration,"
\nit said.<\/p>\n
Year-on-year inflation rose by 6.3 percent in September,
\nslowing from 6.7 percent in August. Cumulatively, inflation as of
\nSeptember stood at 3.80 percent.<\/p>\n
The full-year target for inflation has been set at 7 percent.<\/p>\n
The rupiah's 7.8 percent slide against the dollar this year
\nalso contributed to inflation as it made imported goods more
\nexpensive.<\/p>\n
The local unit averaged Rp 9,163 per dollar in the third
\nquarter. In the first nine months of the year, it averaged 8,878
\na dollar, the central bank said.<\/p>",
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