RI's GDP may shrink 4.1% in 1999: Poll

RI's GDP may shrink 4.1% in 1999: Poll

JAKARTA (Reuters): Indonesia's gross domestic product (GDP) is
forecast to shrink a further 4.13 percent this year after
plunging 13.68 percent in 1998, according to a Reuters poll of 10
research houses.

But its economy is forecast to recover in 2000, growing about
1.78 percent, according to the average forecast for that year.

"GDP would further contract this year as demand for goods and
services would continue to fall, while investors would remain on
the sidelines due to the political uncertainty," said economist
Raden Pardede of Danareksa Sekuritas.

"Growth is expected to return to positive next year. The
rupiah, which affects the supply side, would stabilise after the
elections, provided they run smoothly," the economist added.

"The upcoming elections are so important. We expect that the
elections would be smooth and fair, otherwise the impact on the
economy would be devastating," said economist Budi Hikmat of
Bahana Securities.

Indonesia is to hold polls in June to elect parliamentary
members who will elect a president and a vice president around
November.

The elections are among reforms aimed at setting the world's
fourth most populous nation on the path towards democracy after
32 years of autocratic rule under disgraced former president
Soeharto.

Soeharto was replaced by his protege B.J. Habibie in May 1998,
amid widespread civil unrest and the worst economic and social
crisis in decades.

The Central Bureau of Statistics has said GDP growth would be
between minus two percent and plus 1.5 percent in 1999. It has
given no forecast for 2000.

In December, analysts forecast an average GDP contraction of
5.8 percent in 1999.

They said they were now more optimistic because of the
rupiah's relative stability against the dollar over the past few
months.

"We have seen less rupiah volatility in the past few months
compared with what had happened in the middle of last year," said
one analyst who asked not to be named.

"This development had helped improve sentiment."

Table A: Past GDP performance

1994...........7.5%
1995...........8.2%
1996........,,,7.8%
1997.......... 4.6%
1998...minus 13.68%

Table B: The results of the survey

1999 2000
ING Baring Securities -4 2.1
Bahana Securities 0 to -2 4-5
Citibank, N.A. -3 0 to 1
G.K.Goh Ometraco -5.7 2.8
European brokerage -6.2 2.8
HSBC Securities -6 -0.3
Merrill Lynch Indonesia -3.4 1.5
Danareksa Sekuritas -3.2 1 to 2
Pentasena Arthasentosa -3.3 0.9
Warburg Dillon Read -5.5 1.5
----------------------------------------------------
Average -4.13 1.78