Economy grew by 3.32% in 2001: BPS report
Dadan Wijaksana, The Jakarta Post, Jakarta
Indonesia's economy fared better last year compared to many other economies in the region amid the global economic slowdown with gross domestic product (GDP) growing by 3.32 percent.
The Central Bureau of Statistics (BPS) said in a report released on Monday that domestic consumption, which grew by 5.94 percent, had been the prime mover of the economy in 2001.
Despite the devastating impact of the 1997 financial crisis, Indonesian households have been on a spending spree particularly following the election of President Megawati Soekarnoputri in July last year.
The government is expecting domestic consumption to continue to play a major role in pushing economic growth this year.
But the BPS report suggested that the economy was weakening in the fourth quarter due to slower export performance as the country's main export market, the U.S., has been in an economic recession.
The bureau said that although fourth quarter GDP grew by 1.6 percent compared to the same period in 2000, it contracted by 1.21 percent when compared to the third quarter of 2001.
Economists said that the fourth quarter economic contraction was partly due to the decline in exports.
BPS deputy chief Kusmadi Saleh said that the global economic slowdown, which was aggravated by the Sept. 11 terrorist attacks in the U.S., had affected the country's export performance and the fourth quarter GDP.
There has been concern that a continued slowdown in exports could put the government's 4 percent economic growth target this year in jeopardy particularly with investment expected to remain scarce.
Exports have been the main driver of the 4.8 percent economic growth in 2000.
But the country's export performance, which relies on low-end manufacturing products and commodities, fared better than the high-end electronic export products of other countries like Singapore and Malaysia.
BPS said that exports still managed to grow by 1.88 percent in 2001.
Economists said that the strong domestic consumption and the positive export growth, helped the economy to grow in line with the government's forecast of 3.5 percent.
In comparison, Singapore's economy contracted by 2.2 percent last year.
Senior economist Emil Salim said that the government economic growth target of 4 percent this year could still be achieved despite the poor export performance in the final quarter of 2001 as long as the government could move quickly to restore the investment climate at home and take advantage of the expected rebound in the U.S. economy in the second half of this year.
"Last year, we managed to grow significantly better than our neighbors only because of strong domestic consumption.
"If we can improve our exports and investment performance, then we could grow more this year," the former economic minister said.
He was quick to add, however, that it depended on whether the government could provide stability and certainty in order to lure more investment.
Another economist Raden Pardede from Danareksa Research Institute also stressed the importance of the government's role in ensuring a better investment climate to prop up the country's growth.
"Last year's figure shows that both investment and export performance are still slowing down," he said.