Merrill Lynch predicts 7.5% growth for RI<\/p>\n
JAKARTA (JP): Merrill Lynch of the United States estimates
\nthat the growth of Indonesia's Gross Domestic Product (GDP) will
\nlikely top 7.5 percent this year, rising from an estimated 7.1
\npercent in 1994.<\/p>\n
\"The real GDP growth should top 7.5 percent in 1995, driven
\nlargely by manufacturing and construction industries, while
\ninflation should be maintained at below nine percent,\" Merrill
\nLynch said in the March edition of its Asian Economic Commentary.<\/p>\n
The monthly review said that growth of Indonesia's non-oil
\nsectors should be even higher at eight to nine percent, putting
\nIndonesia at par with its neighbors, such as Thailand and
\nMalaysia.<\/p>\n
The manufacturing and construction industries should continue
\nto drive growth on the back of strong exports and infrastructure
\ninvestment, said Merrill Lynch, a merchant bank which operates
\nsecurities companies in most major Asian countries, including
\nIndonesia.<\/p>\n
It added that the service sectors should also be buoyant along
\nwith more external trade and robust domestic demand. Agriculture
\nmay also revive if whether conditions are favorable.<\/p>\n
Warning<\/p>\n
However, Merrill Lynch warned a strong credit growth and
\nrising inflation and the widening current account deficit, which
\nhave emerged as the major concerns since the latter part of 1994,
\ncould affect the country's economic growth.<\/p>\n
On inflation, the merchant bank said that it was upbeat the
\ninflation would stay in a single digit. \"Against this backdrop of
\na slightly overheated economy, the government's policy focus
\nseems to be leaning towards stability,\" it said.<\/p>\n
Inflation reached 9.24 percent in 1994, as compared to 9.77
\npercent in 1993. During the January-February period of this year,
\ninflation was recorded at 2.47 percent.<\/p>\n
Merrill Lynch said that fixed investment should be the major
\nengine of real GDP growth in 1995 as it is expected to expand
\nabout 12.5 percent. In 1994, approvals for foreign direct
\ninvestments rose 193 percent to US$23.7 billion, while domestic
\ninvestment approvals rose 35 percent to Rp 53.3 trillion ($24.8
\nbillion).<\/p>\n
These approvals will eventually turn into real investment when
\nthe projects are gradually realized.<\/p>\n
The merchant bank considered that speculative attacks on the
\nIndonesian rupiah following the Mexican peso crisis early this
\nyear did not reflect the real condition of the Indonesian
\neconomy.<\/p>\n
\"The favorable external payment position does not warrant any
\nmajor devaluation at this point of time, as continuous capital
\ninflows should be more than enough to fill the current account
\ngap,\" it said.<\/p>\n
Merrill Lynch said that while the large foreign debt --
\nestimated at $93 billion -- may be a concern, strong non-oil
\nexport growth should help reduce the economy's debt-service
\nratio.<\/p>\n
\"It is also this large foreign debt burden which makes a major
\ndevaluation undesirable, as it will merely increase interest and
\nprincipal payments in local currency terms,\" it said.<\/p>\n
It said a weak currency may also aggravate inflation by making
\nimports more expensive.<\/p>\n
\"The rupiah is expected to continue its steady and moderate
\ndepreciation of about five percent against the U.S. dollar during
\n1995,\" it noted. (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/merrill-lynch-predicts-75-growth-for-ri-1447893297",
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