Economy grew by 3.32% in 2001: BPS report

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.