BPS reports higher economic growth
The Jakarta Post, Jakarta
The economy grew at a higher rate in the second quarter of this year compared to the same period last year, driven by stronger domestic consumption, the Central Statistics Agency (BPS) reported on Friday.
This stronger growth raises hopes that the government's economic growth target of 4 percent for the year can be achieved, it said.
The BPS said the economy, as measured by gross domestic product, expanded by 3.76 percent in the second quarter from the same period last year. This is faster than the first quarter year-on-year growth rate of 3.43 percent.
The agency said household consumption and government consumption increased by 4.68 percent and 9.22 percent, respectively.
BPS chief Sudarti Surbakti said was optimistic the economy would grow at a faster pace in the second half of the year.
"Don't forget there will be some big public holidays and festivities in the fourth quarter of the year, which will boost household consumption," she told reporters.
Some economists had said that growth in the second quarter would likely slow amid signs of declining domestic consumption, as people's purchasing power weakened due to high unemployment and the rising prices of utilities.
This, combined with the recent Severe Acute Respiratory Syndrome outbreak, prompted economists to slash this year's growth forecast to about 3.5 percent. The recent terrorist bombing at a Jakarta hotel only aggravated the situation.
But government officials have remained confident that this year's economic growth target can be met. They have said that domestic consumption will remain high on the back of improving macroeconomic conditions and a recovery in the export sector.
The rupiah has been appreciating rapidly since the beginning of this year, which has been the main factor driving inflation to a 20-year low during the first half of 2003. This has in turn provided room for the central bank to continue cutting its benchmark interest rate to single-digit levels at about 9 percent, compared to more than 13 percent at the beginning of this year.
Elsewhere, BPS said capital formation and exports increased respectively by 4.87 percent and 0.16 percent during the second quarter.
The agency said almost all sectors in the economy enjoyed higher growth in the period. The agricultural sector grew by 1.60 percent, the mining sector by 4.42 percent, manufacturing sector 2.78 percent, the electricity, gas and water sector 7.49 percent, construction 5.23 percent, trade, hotel and restaurant 4.61 percent, transportation and communications 7.34 percent, finance 5.78 percent, and the services sector 2.19 percent.
The Indonesian economy has been growing at a modest rate of 3 percent to 4 percent over the past couple of years. But economists have said that in order to create enough jobs for the millions of people who lost their jobs following the late 1990s economic crisis, the economy has to grow at between 6 percent and 7 percent per year.
The government is targeting the economy to grow by 5 percent next year, and 6 percent starting in 2006 or 2007.
Box
Growth of GDP components
Components Growth rate (%)
Q2/Q1 2003* Q2 03/Q2 02 **
Household consumption 1.79 4.68 Govt consumption 7.24 9.22 Fixed capital formation 0.49 4.87 Exports 1.46 0.16 Imports -5.76 -2.19
* Second quarter of 2003 compared to first quarter of 2003
** Second quarter of 2003 compared to second quarter of 2002