BPS to cut GDP forecast to 1.5%
BPS to cut GDP forecast to 1.5%
JAKARTA (JP): The Central Bureau of Statistics (BPS) said on
Monday it would revise down this year's economic growth forecast
to 1.5 percent from the initial target of 4 percent, due to
continuing political instability.
Speaking at a news conference, BPS chairman Sugito Suwito said
the political instability had dragged down the economic recovery
process and might continue to give a negative impact to the
economy until the end of the year.
"BPS will have to revise the country's whole year's growth
forecast from 4 percent to as low as 1.5 percent should a worst
case scenario apply," Sugito said.
He said BPS was still considering the more exact figure of
this year's forecast, hinting the worst case scenario would take
place if political instability sustained and continued to have a
negative impact on the rupiah.
BPS reported that Gross Domestic Product (GDP) grew 3.2
percent in the first quarter of this year over the same period
last year, within the government's initial target range of 3
percent and 4 percent.
The growth, according to BPS, is driven by an increase in
consumer spending, exports and investment. But the agency is less
optimistic about the second quarter, saying that political
instability would slow down economic activities.
Sugito estimated that the economy would likely stagnate in the
next few months due to the uncertainty and the GDP would likely
record zero growth compared to the 1.07 percent forecasted.
"We previously expected that the first quarter's growth would
continue in the second quarter, but the weakening rupiah, new
indications of high inflation and falling share prices on the
local stock exchange have soured our view," he said.
The local currency has lost over 5 percent of its value
against the U.S. dollar in a week, led by fears of the U.S.
government's plan of hiking its interest rates and unsupportive
statements by policy makers in the government here.
The rupiah closed at Rp 8,540 against the greenback on Monday,
compared to Rp 8,380 the previous day.
Being dragged down by the rupiah, the Jakarta Stock Exchange
Composite Index lost another 2 percent on Monday to close at
516.43 points.
Bank Indonesia Governor Sjahril Sabirin said he was sticking
to the central bank's GDP forecast of between 3 percent and 4
percent this year.
"Our estimate remains the same, that this year's growth will
be between 3 percent and 4 percent," he said.
According to Sugito, the potential for strong economic
recovery in Indonesia was already there, as indicated by the
surprising increase in manufacturing and investment activities
during the first quarter, but it could not yet follow through due
to political instability, weak law enforcement and growing
security concerns.
Investment grew 11.68 percent in the first quarter over the
same period last year, while manufacturing increased 7.2 percent.
"Both of these sectors slumped during the crisis, the activity
turnaround of these areas is a key indicator of an economic
recovery," Sugito said.
The breakdown of the GDP growth showed that the agriculture
sector declined in the first quarter by 8.5 percent from the same
period in 1999, but grew sharply by 15.3 percent as compared to
the fourth quarter of 1999.
The manufacturing sector rose 7.2 percent in the first quarter
over the same period last year, but declined 1.1 percent from the
fourth quarter in 1999.
The construction sector soared 12.9 percent compared to the
first quarter of 1999 and 0.9 percent from the previous quarter.
The transportation and communications sectors grew 11.5
percent over the same quarter last year, but only increased 2.16
percent over the previous quarter.
Finance and leasing's year-on-year growth stood at 5.4 percent
this quarter, but if compared to the previous quarter it only
stood at 0.2 percent.
The utilities sector (electricity, gas and water) was up 8.5
percent over the same quarter last year, but declined 3.4 percent
over the previous quarter. (udi)