2001 growth target attainable: Econit

2001 growth target attainable: Econit

JAKARTA (JP): Despite an expected weaker export performance,
the government could still achieve its 2001 economic growth
target of 3-3.5 percent on the back of rapidly growing domestic
consumption and gross investment, the private think tank Econit
said on Tuesday.

Deputy managing director of the Jakarta-based advisory body
Hendri Saprini said that the two indicators had been the main
contributors to the country's economic growth during the first
two quarters and the trend seemed to continue toward the next
semester.

She explained that while net-export growth showed a declining
trend in the first two quarters, domestic consumption, investment
inflow and government spending grew at a comfortable rate of 8.38
percent in the second quarter of this year, compared to 4.69
percent in the same period last year.

Hendri said that the weaker export growth was mainly due to
the economic slowdown in the country's major export destinations
including Japan and the U.S.

She added, however, that the country's lack of competitiveness
in the international market also played a part in the export
growth downturn.

The expected the economic slowdown in the country's major
trading partners had earlier raised concern that the government
might not be able to meet its 2001 growth target.

As the current economic and political situation appears to be
heading in the right direction, domestic consumption was expected
to improve significantly in the second semester, Econit said.

It said that the highest growth for the year would likely
occur in the last quarter, with two festivities: the Muslim new
year, Idul Fitri, and Christmas celebrations falling in the same
month.

Domestic consumption in the first and second quarter increased
by 5.9 percent and 4.6 percent respectively, compared to the
corresponding periods last year, Econit said.

Beside domestic consumption, gross investment would also play
a crucial role in the country's economic recovery as it had been
able to maintain its high growth of more than 15 percent for the
last five quarters despite the political uncertainty during the
period, Econit said.

Elsewhere, Hendri called on the government to take advantage
of the above improving indicators.

"The real sector's performance in the first semester has been
outstanding. The government should give full support by issuing
more favorable policy," she told reporters.

"And the current tight money policy is certainly not helping,"
she added, referring to the much-criticized high interest rate
policy of Bank Indonesia.

Bank Indonesia said earlier that it would maintain its tight
monetary policy for the time being despite the month-on-month
deflation of 0.21 percent in August, citing inflationary pressure
remained a worry.

The interest rate for Bank Indonesia's one-month SBI
promissory notes is currently at 17.67 percent.

"The interest rate at the moment is rather too high for the
business community and I am hopeful that Bank Indonesia will
evaluate their policy sometime soon," Hendri said.(10)