BI expects robust GDP growth in third quarter<\/p>\n
Dadan Wijaksana, Jakarta<\/p>\n
Indonesia's economy could expand by around 5.1 percent in the
\nthird quarter of the year, as a low-interest-rate environment
\nmaintain robust consumer spending, while exports continue to
\nrise, the central bank said in its latest economic assessment.<\/p>\n
That would make it the fastest growth rate in six quarters.<\/p>\n
\"The economic growth in the third quarter of 2004 is predicted
\nto range between 4.6 percent to 5.1 percent,\" said a statement
\nthat outlined the conclusions made at a Bank Indonesia board
\nmeeting on Thursday evening.<\/p>\n
The figure is better than that of the second quarter, which
\nthe central bank estimates at between 4.2 percent to 4.7 percent.<\/p>\n
The economy grew by 4.5 percent in the first quarter.<\/p>\n
The upbeat sentiment was, in part, based upon an assumption
\nthat exports would fare better than in the previous quarter --
\nnotably a boost in the exports of non-oil and gas commodities
\namid global economic recovery.<\/p>\n
In the second quarter, exports were estimated to rise by 8.8
\npercent, supported by a 3.8 percent increase in non-oil and gas
\ncommodities.<\/p>\n
However, the central bank said that exports of non-oil and gas
\ncommodities would likely grow at a faster pace of 6.5 percent in
\nthe third quarter, providing economic growth a much-needed boost.<\/p>\n
The official growth target for the largest economy in
\nSoutheast Asia this year has been set at 4.8 percent.<\/p>\n
The rise in exports bodes well for the government's effort to
\nreduce the dominant role of domestic consumption in driving
\neconomic growth.<\/p>\n
\"...Efforts must surely be taken to reduce the dependence of
\neconomic growth on consumption,\" the BI statement said.<\/p>\n
The growth would also be supported by a low-interest-rate
\nenvironment.<\/p>\n
The BI said that any increase in interest rates would be kept
\nto a minimum.<\/p>\n
Low interest rates encourage consumer spending, which makes up
\nabout 70 percent of the country's economy.<\/p>\n
The economy needs to grow by at least 6 percent to provide
\nenough jobs if it wants to significantly alleviate poverty and
\nreduce unemployment.<\/p>\n
Other macroeconomic indicators, including the exchange rate
\nand inflation, would likely also improve, after they in the
\nsecond quarter.<\/p>\n
\"Inflation in the third quarter, and the whole year, is
\npredicted to close at the upper-end of the earlier target,\" it
\nsaid, referring to the target of between 5.5 percent to 6.5
\npercent.<\/p>\n
Year-on-year inflation in the second three-month period was
\nabove that range at 6.83 percent, mainly because of the rupiah's
\nslump against the U.S. dollar.<\/p>\n
The local unit lost 6.3 percent of its value during that
\nperiod to hover at an average of 9,005 per dollar taking a hit
\nfrom various concerns, both external and at home.<\/p>\n
Of late, however, the rupiah regained some ground against its
\nU.S. counterpart, the statement said, with the local currency
\naveraging 8,990 per dollar in the first week of July.<\/p>",
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