2nd quarter GDP surprising BPS report

JAKARTA (JP): The economy grew by a surprising 3.52 percent in the second quarter of this year compared to the same period last year, despite a world economic slowdown and domestic political problems.

The Central Bureau of Statistics (BPS) reported on Wednesday that, on a quarter-to-quarter basis, the economy, as measured in gross domestic product (GDP), expanded by 0.18 percent in the second quarter compared to the first quarter.

"The growth, although quite insignificant in quantity, is surprising given that usually the figure has been negative for the second quarter," Kusmadi said at a media conference.

BPS said that at second quarter current prices, GDP was equal to Rp 366.5 trillion (about US$43.3 billion), while based on 1993 constant prices, GDP was Rp 101.9 trillion.

Analysts said that the second quarter GDP data was higher than market expectations.

"It is not a bad figure considering the current global economic slowdown," said Ferry Latuhihin of Danareksa Research Institute.

He said that the country's second quarter GDP growth was even higher compared to its peers in the region, as the growth was based on a relatively low base.

However, Ferry said that Danareksa still maintained its initial full-year GDP projection of between 3.5 percent and 4 percent as the impact of the slowdown in the major world economies would be greater in the second half of the year.

The government has targeted the economy to grow by 3.5 percent this year, a decrease compared to the 4.8 percent growth registered in 2000.

The world economic slowdown is expected to cause the country's exports to decline, and this will affect economic growth as well.

BPS said that six sectors contributed to the second quarter growth, while three other sectors contracted.

The agriculture sector contracted by 4.59 percent in the second quarter compared to the first quarter due to the end of the harvest season, while the mining sector and transportation and communications contracted by 0.20 percent and 0.46 percent respectively.

The mining sector, meanwhile, grew by 2.01 percent; electricity, gas and water industries by 6.39 percent; construction 0.90 percent; trade, hotel and restaurant 0.99 percent; finance 0.60 percent; and the services sector 1.45 percent.

BPS said that on an annualized basis, which excludes seasonal factors, all sectors of the economy expanded in the second quarter.

It said that the agriculture sector grew by 1.33 percent, mining 2.26 percent, manufacturing 4.75 percent, electricity-gas- water 9.85 percent, construction 0.96 percent, trade-hotel- restaurant 5.27 percent, transportation-communications 6.13 percent, finance 2.41 percent and services 1.63 percent.

On the demand side, BPS said that household consumption expanded by 0.16 percent, government spending 3.84 percent, investment 4.37 percent, exports 3.30 percent and imports 0.08 percent.

BPS added that it had revised the first quarter GDP growth to 1.81 percent on a quarter-to-quarter basis from 2.63 percent as initially reported, and to 3.21 percent year-on-year from 4.01 percent.

"We made the revision because, when it was announced, some data was not included in the GDP calculation," Kusmadi said.

With the revision, the bureau said the economy grew by 3.37 percent in the first semester of this year compared to the same period last year.

Confidence

Meanwhile, BPS said that between April and June this year, business confidence rose 4 percent to 111.75 points, compared to the 107.73 between January and March.

The index was processed by BPS in a quarterly survey of companies and business people in Greater Jakarta and Surabaya, based on the number of business orders, earnings, the prospect of increasing the volume of work, and production utility, Kusmadi said.

"A figure above 100 means that businesses are optimistic, while below 100 shows a pessimistic view," he explained.

BPS said that it expected an increase in business confidence during the next quarter to 112.99, as economic conditions continue to improve.

However, the second quarter consumer confidence index declined slightly to 104.1 compared to the 110.52 in the first quarter of this year, and was expected to continue to drop during the next three months to 94.85.

The drop was caused by a pessimistic outlook for household earnings, inflation and the purchase of durable goods, BPS said.(tnt)