GDP grows faster than expected in second quarter: BPS

GDP grows faster than expected in second quarter: BPS

JAKARTA (JP): The Central Bureau of Statistics (BPS) announced
here on Friday a higher than expected growth rate in the
country's gross domestic product (GDP) in the second quarter but
business analysts warned that the fragile condition in the
political field could drag down the upward trend in the economy.

BPS deputy chairman Kusmadi Saleh said that the economy grew
by 4.13 percent year on year in the second quarter, much higher
than the market consensus of 3.5 percent.

He said that the GDP grew at a meager level of 0.38 percent in
the April-June period, much lower than the quarterly growth level
of 2.36 percent in the previous quarter. "But if compared to the
same period last year, the growth rate reached 4.13 percent," he
added.

Kusmadi said that the quarterly growth rate was lower in the
second quarter due to a seasonal decline in the agricultural
sector.

"But the overall performance is very encouraging and we are
optimistic that the GDP growth will meet the official target of
between 3 percent and 5 percent this year," he told a press
briefing.

According to a BPS report, the GDP value, based on the current
price, increased to Rp 609.2 trillion (US$71.6 billion) in the
first half from Rp 560.8 trillion at the same period last year.

Kusmadi said the major contributors to the GDP growth in the
second quarter were the non-oil industries, utility sector and
construction as well as services.

The construction sector grew by 13.07 percent in the second
quarter over the same period last year, or 2.22 percent compared
to the first quarter result.

The transportation and communications sectors came second with
year on year growth of 10.51 percent, although they showed only a
paltry 0.93 percent growth in the quarter-on-quarter basis.

In the second quarter, the manufacturing sector's year-on-year
growth stood at 5.73 percent, higher than the quarter-on-quarter
record of 1.12 percent.

Utility sector rose 6.79 percent year-on-year, slightly higher
than the quarter-on-quarter record of 4.52 percent.

The agriculture sector is the only sector that recorded a
negative growth on both year-on-year and quarter-on-quarter bases
at minus 4.30 percent and minus 4.12 percent respectively.

Kusmadi said the agriculture sector had always declined in the
second, third and fourth quarters of any given year since
harvesting season for most commodities took place between January
and April.

On the demand sides, government spending rose 2.33 percent
year-on-year, 6.12 percent for the quarter-on-quarter.

He said the government had spent more money recently partly on
its program to raise salaries for senior government officials and
on the country's security program.

The actual household spending rose by 2.56 percent in the
second quarter over the same period last year, better than the
quarter-on-quarter result of only 0.40 percent.

Investment's year-on-year growth jumped by 21.14 percent,
compared to the quarter on quarter increase of 3.31 percent.

While exports jacked up by 24.08 percent year-on-year and 5.04
percent quarter-on-quarter.

Economists described the economic growth in the second quarter
as being more healthy than in the previous quarter as it was
driven by exports rather than by consumer spending as many
previously feared.

But they warned that the fragile condition on the political
front could drag down the upward trend in the country's economic
performance.

Head of research at PT Socgen-Crosby Securities Indonesia, Lin
Che Wei said he was quite optimistic that the growth trend would
be sustainable as long as the political situation would not get
any worse than it already is.

He said the second quarter result in particular was way beyond
expectation. "Overall the result is quite satisfactory. It's well
above our forecast. It is higher than the market's expectation."

Lin said the second quarter growth of 0.38 percent was above
his earlier forecast of 0.2 percent, while on a year on year
basis the 4.13 percent result was well above his estimate of 3.6
percent.

However, Lin said, the country should be aware that the
current political instability might continue over the next couple
of months and drag down economic activities.

Kusmadi said he was upbeat that the GDP growth in the third
quarter would continue to show a positive trend, but refused to
disclose a figure.

He said economic activities had grown quite significantly in
the second quarter of this year as indicated partly by the sharp
year-on-year growth of investment and exports. (cst)