Economy grows faster than expected in 2004

Economy grows faster than expected in 2004

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

Indonesia's economy grew faster than projected last year, thanks
to continued robust spending and signs of investment revival,
Coordinating Minister for the Economy Aburizal Bakrie said on
Tuesday.

The economy could grew by as much as 5.1 percent in 2004, the
fastest pace since the 1997-1998 crisis, beating the initial
target of 4.8 percent as set out under the 2004 state budget.

"We were able to beat the target and reach 5 percent to 5.1
percent growth in 2004," Aburizal told a mining seminar here.

In comparison, the economy grew by 3.8 percent and 4.1 percent
in 2002 and 2003 respectively.

Aburizal added that the fairly strong growth was supported by
relatively benign inflation and the low Bank Indonesia's
benchmark interest rate (SBI).

The low inflation and interest rate helps maintain and boost
people's purchasing power and keep strong domestic consumption in
place.

In total, consumption makes up about 65 percent to 70 percent
of GDP.

The Central Statistics Agency (BPS) is slated to announce the
country's 2004 economic growth on Wednesday.

Indonesia, with some 40 million of its 220 million people
living at and below the poverty line, needs to pick up its
economic growth to help contain the problem.

Moreover, about 2.5 million new workers are entering the
country's job market each year, meaning that the economy has to
expand by at least 6 percent just to accommodate that.

Aburizal said that from this year on, a pick up in exports and
investment was a must, as "We cannot rely on consumer spending to
continue supporting growth".

With early signs of investment revival in 2004, Aburizal was
optimistic that investment would fare better this year, providing
more support for growth.

The government expects the economy to expand by 5.5 percent
this year.

In the seminar, the minister also said that the new government
targeted economic growth of 7.6 percent by 2009.

"That can only be reached if the investment ratio in relation
to GDP could reach 28.4 percent by 2009, from 20.5 percent last
year."