Indonesian economy grew 3.92 percent in 3rd quarter: BPS

The Jakarta Post, Jakarta

The economy grew by 3.92 percent during the third quarter over the same period last year, said the Central Bureau of Statistics (BPS), adding that slowing consumption growth meant Indonesia would be unlikely to meet its full year economic growth target of 4 percent.

BPS deputy chairman La Ode Syafiuddin said on Friday that domestic consumption remained the key driver behind the 3.92 percent third quarter growth in the economy.

"Although growth in private consumption has slowed down a bit, it has still contributed a lot to the overall economy," he told a press briefing. "Exports and investment also increased slightly."

Third quarter private consumption, as measured by household spending, grew more slowly at 4.9 percent against 6.3 percent during the third quarter last year.

Over the same period, however, exports and investment spending recovered after both had plunged in the second quarter.

Exports grew by 1.6 after slumping by 7.1 percent in the previous year, while investment grew by 2.1 percent compared to a 1 percent drop last year.

Despite the promising figures, Syafiuddin warned that the upward trend was unsustainable.

The BPS growth figures have yet to fully take account of the Oct. 12 Bali bombing, which will dampen the economic outlook well into 2003.

The terrorist attack on the holiday island has dealt a severe blow to Indonesia's tourism sector, which on average contributes US$5 billion to the economy.

Renewed security concerns also undermine business confidence in a country where the net capital inflow is already negative.

Legal uncertainties, a corruption prone judiciary, and turbulent labor relations are among the main investor worries keeping capital away from the country.

The government has revised down its economic growth target, as measured by the country's gross domestic product (GDP), to 4 percent from 5 percent previously. GDP measures the annual output of goods and services produced in a country.

Analysts, however, doubt that the revision is sufficient to reflect the economic fallout from the Oct. 12 terrorist strike.

"The Bali bombings will certainly take their toll on the economy. I don't have the precise figures, but it'll be impossible to achieve the 4 percent target (of growth)," Syafiuddin said.

Aviliani, an economist at the Institute for Economic and Finance Development (Indef), was also doubtful about the target.

She said investment and exports needed to grow faster if the 4 percent growth target was to be achieved.

"Even before the Bali attacks, the performance of these two indicators have been somewhat disappointing. I think the target is no longer realistic at this stage," she said.