BI expects 1999 GDP maximum at zero percent
BI expects 1999 GDP maximum at zero percent
JAKARTA (JP): Bank Indonesia reiterated on Monday its earlier
forecast that Indonesia's economic growth this year would be
between minus one and zero percent.
"The board of governors are of the opinion that the overall
1999 real gross domestic product (growth) is still slow at
between one and zero percent," the central bank said in a press
statement following its monthly board of governors meeting.
BI said on the demand side growth would be stimulated,
particularly by an increase in private sector consumption driven
by lower interest rates and improving consumer expectations.
"This is also supported by a higher profit margin in certain
business sectors," BI added.
The central bank believed the economy could grow faster if the
bank and real sector restructuring process runs well.
Indonesia's economy suffered a contraction of more than 13
percent last year when the economic crisis deepened.
BI also forecast the 1999 inflation rate would be in the range
of two to three percent.
The central bank explained the inflation level would still be
relatively low, despite Christmas and the Moslem fasting month
holidays in December, and New Year and Idul Fitri celebrations in
January, because of the low inflation during the past 10 months
and the existence of unused production capacity in the economy.
Inflation in October was 0.06 percent, the first inflation
since March, sending the year-on-year inflation to 1.58 percent.
The economy suffered hyperinflation of more than 77 percent in
1998.
BI said that along with the low inflation level, the central
bank benchmark interest rate was expected to be between 10 and 12
percent by the year end.
The interest rate on Bank Indonesia one-month SBI promissory
note is currently at 13.06 percent.
The central bank also reported in a press statement that its
net foreign exchange reserves as of October 29 were at US$16.20
billion, an increase of $62.70 million on the previous week's
level, due to an increase in oil revenue.
The Bank also said that gross forex reserves increased by
$63.90 million to $27.14 billion during the week. (rei)