Economy contracted 10% in 1st quarter

Economy contracted 10% in 1st quarter

JAKARTA (JP): The 22-month economic crisis continues to take
its toll, with the economy contracting by 10.34 percent in the
first quarter of 1999 compared to the same period last year, the
Central Bureau of Statistics (BPS) reported on Monday.

"But compared to the fourth quarter of last year, the economy
grew by 1.34 percent in the first quarter of 1999, primarily due
to food crop harvest activities which traditionally occur during
the first months of each year," BPS chief Suwito Sugito said.

Suwito projected the economy would contract by only 1.02
percent for the entire year, compared to a contraction of 13.68
percent in 1998.

"Gross domestic product growth in 1999 will be minus 1.02
percent, if there aren't any massive, violent incidents."

He said GDP growth in the remaining quarters would depend on
the performance of other economic sectors.

He predicted instability resulting from the June general
election would setback the overall economy, but that key economic
reform programs in force would provide positive results.

The BPS report said almost all sectors of the economy
contracted during the first quarter of the year, compared to the
same period in 1998.

The financial sector suffered the most with a contraction of
47.59 percent, followed by communications (18.27 percent), hotel
and restaurants (14.10 percent), manufacturing (9.59 percent),
construction (4.95 percent), mining (0.69 percent) and the
service sector (0.20 percent).

The only economic sectors experiencing positive growth were
agriculture (2.63 percent) and electricity, gas and water (7.67
percent), the report said.

Companies heavily dependent on imported raw materials were
most severely affected in the manufacturing sector, as the
exchange rate of the rupiah against the U.S. dollar remains low
compared to the pre-crisis level of July 1997, the report said.

The public's declining purchasing power had impacted on a
variety of industries including the airlines industry, hotels,
restaurants and real estate firms.

BPS said resource-based industries, particularly the
agriculture sector, were the economic winners of the crisis.

BPS said the agriculture sector would most likely increase its
contribution to the country's 1999 GDP, after a steady decline
for more than 30 years.

The agriculture sector was projected to contribute 19.89
percent to GDP, compared to the 1998 contribution of 18.84
percent.

The contribution of the manufacturing sector to the 1999 GDP
was also projected to increase from 26.23 percent in 1998 to
27.67 percent, because production activity in various non-oil and
gas industries remained relatively steady.

BPS reported that the trade surplus in February slightly
increased by 9.6 percent to $1.37 billion, compared to $1.25
billion in January. However, trade surplus in the January-
February 1999 period declined by 16.03 percent to $2.62 billion,
from $3.12 billion in the same period in 1998.

BPS said the value of exports in February increased by US$3.19
billion from $3.02 billion in January.

Export growth in the first two months of the year declined by
21.99 percent to $6.21 billion from $7.96 billion in the same
period last year.

The report said non-oil and gas exports in February jumped by
10.23 percent from the January figure to $2.62 billion. But the
cumulative January to February level was 22.06 percent lower than
the total of the first two months of 1998.

The value of imports in February 1999 rose slightly to $1.82
billion from $1.77 billion in January, BPS said.

January and February imports in 1999 totaled $3.59 billion --
a 25.86 percent drop from $4.84 billion in the same period last
year.

"Imports for the first quarter of this year are projected to
decline by 24 percent, compared to the same period last year,"
BPS said. (rei)