GDP grew by 3.66% in 2002: BPS

The Jakarta Post, Jakarta

The Central Statistics Agency (BPS) announced on Monday that the country's economy in 2002 grew at a slower rate than that projected by the government.

The BPS said gross domestic product (GDP) grew by 3.66 percent last year compared to the figure in 2001. But the figure was lower than the government's forecast of 4 percent.

The lower GDP figure was anticipated by many economists, who had said that negative developments both at home and overseas would curtail economic growth.

As expected, growth last year continued to be driven by household and government consumption, which respectively expanded by 4.72 percent and 12.79 percent over the 2001 levels.

The BPS said that investment and exports declined by 0.19 percent and 1.24 percent respectively.

The government has been under pressure to accelerate economic growth so as to absorb the growing army of unemployed. Experts have said that in order to create enough jobs, the economy must grow by more than 6 percent.

But unless the government was able to push exports and create a better investment climate at home, it would be impossible achieve the higher growth target.

The slower than expected growth in 2002 was partly due to the worsening investment climate at home. The poor implementation of regional autonomy, lingering labor unrest, security problems and widespread corruption have discouraged new investment from coming in. In fact, some existing investors have even started to leave the country.

The economic downturn in developed nations has also affected the country's exports, although some experts said that various domestic uncertainties had been causing foreign buyers to shift their orders to other countries.

The Sept. 12 bombings in Bali were seen as another factor slowing down the economy as the terrorist attacks, which killed nearly 200 people, mostly foreign tourists, had significantly curtailed the tourist industry.

The government is targeting growth of 4 percent this year. It hopes that in addition to consumption, exports will make a greater contribution to the economy.

Analysts say that foreign investment will remain low this year unless the government can move quickly to improve the investment climate.