Exports fuel robust growth<\/p>\n
JAKARTA (JP): The economy grew by a surprising 5.12 percent in
\nthe third quarter year-on-year, driven by a strong export
\nperformance.<\/p>\n
The Central Bureau of Statistics (BPS) reported on Wednesday
\nthat compared to the second quarter, the economy as measured by
\ngross domestic product (GDP), rose 1.97 percent.<\/p>\n
The official GDP data shows the economy is growing faster than
\nmost analysts expected. The market consensus for year-on-year
\nthird quarter GDP growth was less than 5 percent.<\/p>\n
\"If there are no disturbances, the economy is expected to grow
\nby more than 5 percent this year,\" BPS deputy Kusmadi Saleh said
\nduring media conference.<\/p>\n
The government recently revised upward its economic growth
\nforecast for the year to between 4.5 percent and 5 percent,
\ncompared to the initial projection of between 3 percent and 4
\npercent.<\/p>\n
The economy grew by a slight 0.23 percent in 1999 after
\ncontracting by nearly 14 percent in 1998.<\/p>\n
BPS said the stronger than expected GDP growth was mainly
\ndriven by exports, not consumption.<\/p>\n
The bureau said exports in the third quarter grew 4.53 percent
\nto Rp 28 trillion (US$3.2 billion on the average rate during that
\nperiod) from the second quarter, based on 1993 constant prices.<\/p>\n
The bureau said household consumption, the main engine for
\neconomic growth last year, only grew 0.8 percent to Rp 68.9
\ntrillion in the third quarter.<\/p>\n
It said that in this same period government consumption
\ndeclined 5.75 percent from Rp 7.5 trillion to Rp 7 trillion.<\/p>\n
It added that gross capital formation fell (in real terms or
\nbased on 1993 constant prices) 0.92 percent to Rp 20.8 trillion
\nfrom Rp 21 trillion in the second quarter.<\/p>\n
BPS said the economic growth was not only export-driven, but
\nwas also a broader-based growth.<\/p>\n
\"Almost all sectors in the economy in the third quarter posted
\ngrowth compared to the second quarter, except the services
\nsector,\" BPS said.<\/p>\n
It said the largest gain was made by the agriculture sector,
\nwhich grew 3.86 percent; followed by the electricity, gas and
\nwater sector (3.20 percent); trade, hotel and restaurant sector
\n(2.02 percent); transportation and communications (1.66 percent);
\nmining (1.30 percent); and construction (0.92 percent).<\/p>\n
The bureau said the services sector, however, contracted 0.02
\npercent.<\/p>\n
Based on 1993 constant prices, third quarter GDP was Rp 295.8
\ntrillion but on current market prices the GDP was valued at Rp
\n948.8 trillion. In comparison, GDP based on current market prices
\nfor all of 1999 totaled Rp 1,119.4 trillion.<\/p>\n
But Kusmadi warned the positive economic growth could be
\nderailed if the exchange rate of the rupiah was \"uncontrollable\".<\/p>\n
The rupiah has been under intense pressure over the past few
\nmonths due to a combination of external factors and political
\nuncertainty at home. The rupiah has now fallen more than 23
\npercent against the U.S. dollar since early this year.<\/p>\n
Analysts also have said political instability continues to
\novershadow positive news on the economic front.<\/p>\n
According to experts, fresh capital is crucial to support
\nexports, but political jitters have discouraged investors from
\nentering the country.<\/p>\n
President Abdurrahman Wahid has faced increasing pressure to
\nstep down, and social unrest and violence continue to rock the
\nregions.<\/p>\n
Kusmadi also called on the central bank to relax its monetary
\npolicy to push the banking sector into lending more money to
\nexporters.<\/p>\n
He said this step would not necessarily trigger inflation as
\nlong as there was no disruption in the supply of raw materials.<\/p>\n
Bank Indonesia has been guiding interest rates upward in a bid
\nto help stabilize the ailing rupiah and curb inflation, which has
\nbeen on the rise due to the recent increase in fuel prices and
\ntransportation costs.<\/p>\n
Meanwhile, the Danareksa Research Institute said on Wednesday
\nGDP growth in 2000 might be higher than its forecast of 4
\npercent.<\/p>\n
\"Overall, economic activity seems to be going well and
\nsurpasses the previous forecast consensus,\" Danareksa said.<\/p>\n
It said indicators like the sale of motorcycles, exports and
\nfuel and electricity consumption showed much greater growth than
\nthe previous year. (rei)<\/p>",
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"sponsor": "Okusi Associates",
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