SG downgrades RI growth

SG downgrades RI growth

SINGAPORE (Dow Jones): SG Securities, despite seeing "glimmers of hope" in Indonesia, has abandoned its earlier forecast that the country's economy could grow this year.

In a new report made available Thursday to Dow Jones Newswires, the Singapore-based economic research team of SG said it now expects a change in Indonesian gross domestic product this year of between zero growth to a 2 percent contraction.

Earlier, the securities firm had projected that the battered economy could post a GDP growth of 2 percent this year.

The reason for the downgrade is SG's view that "there will be no pick-up in bank lending to the private sector for much of 1999." SG described last Saturday's Indonesian banking reforms, including the closure of 38 banks, as "very positive," but it expects that lending rates can't drop to below 30 percent per year until the end of this year.