Indonesia's 2001 GDP growth seen at 3.17 percent: Poll

Reuters, Jakarta

Indonesia should record economic growth of 3.17 percent this year and 4.0 percent in 2002, bolstered by political stability and improved business conditions, a Reuters poll of 10 research houses showed.

The government has predicted GDP growth of 4.5-5.5 percent next year, up from its forecast of 3.5 percent in 2001, but many analysts doubt next year's target can be achieved.

President Megawati Soekarnoputri's efforts to kick-start growth are crucial to restoring stability after years of political chaos and social upheaval in the world's largest Muslim nation.

So far, she has won strong praise for filling key cabinet posts with economic professionals and for her first budget, covering 2002.

But her country is embroiled in bitter ethnic and religious divisions, complicated by political strife that has seen four presidents in office over the past four years, as Indonesia moved towards democracy after decades of autocratic rule.

A major oil and commodities exporter, Indonesia had yet to recover from the 1997 Asian financial crisis when the global economy began slowing this year and won't escape the economic fallout from the Sept. 11 attacks on the United States.

But some analysts saw domestic demand in the world's fourth most populous country as the key factor.

"Basically, 75 percent of Indonesia's economy is based on consumption, which much depends on stability, Standard Chartered economist Fauzi Ichsan said.

"We believe that Indonesia will have better political stability next year, (better) political certainty."