GDP growth to be over 4 percent in first quarter: BI

GDP growth to be over 4 percent in first quarter: BI

JAKARTA (JP): Bank Indonesia (BI) said on Wednesday the
country's economic growth would exceed its initial target of 4
percent in the first quarter this year compared to the same
period last year.

Deputy governor Achjar Ilyas said the central bank still
needed one or two days to know the exact figure of the first
quarter's Gross Domestic Product (GDP) expansion as important
data were still being evaluated.

"We are sure, though still being conservative, in saying that
the first quarter's GDP stands at over 4 percent," he told a
media briefing after the central bank's board of governors
meeting.

He identified strong exports and domestic consumption as the
growth's key factor.

"Looking at the recent positive developments, we have adjusted
the predicted 4 percent year-on-year GDP growth to over 4
percent," he said.

He said the forecast for 2000 GDP growth would be over 4
percent as well.

Lower imports and stronger exports have widened Indonesia's
trade surplus, providing good ground for the country's GDP.

The country's stronger exports are supported by higher oil and
gas prices and a sharp increase in the volume of non-oil and gas
products which the country produces for the overseas market.

On the domestic consumption side, there was strong growth,
particularly in the industrial and utility sectors (electricity,
water and gas), deputy director of research, economy and monetary
policy Halim Alamsyah said.

He also stressed domestic consumption and exports as the key
factors behind the stronger-than-expected economic growth.

"It is important that our imports are in no way disturbed.
Imports are necessary so that in turn we can export," he said,
referring to the piles of imported goods awaiting dispatch from
Jakarta sea port due to technical problems.

Achjar added that BI saw Indonesia's macroeconomic
developments were on the right track, with interest rates being
kept low and inflation rates under control.

The inflation rate in April stood at 0.56 percent, lower than
the predicted 1 percent.

BI will not change its targeted inflation rate of between 3
percent and 5 percent for 2000 despite rises in civil servant
pay, Achjar confirmed.

"We will continue to exert our efforts to maintain price
stability as it is important for economic growth," he said.

The rupiah exchange rate against the U.S. dollar, however, has
been depressed lately. Achar said this was due to negative
sentiments created by the postponement of the International
Monetary Fund's loan disbursement as well as the downgrading of
the country's foreign currency credit rating due to technical
issues.

"But we think such negative sentiments will soon be
neutralized as a new letter of intent is on the way," he said.

The rupiah depreciated 4.3 percent against the American dollar
in April.

Another factor behind the rupiah's depreciation against the
dollar, Achjar said, was the strengthening of the U.S. economy.
He explained that this had made the dollar gradually fare better
against other major world currencies.

Halim said BI would be taking a "tight biased" position for
the next month and was going to reduce the excess liquidity of
rupiah from the market to further ensure its value stabilizes
against the greenback.

He said, however, that negative market sentiments had played a
major role in the depreciation of the rupiah against the dollar.

"The depreciation of the rupiah has lately been too much due
to nonfundamental issues," he added. (udi)