Signs of economic recovery continue: BPS

JAKARTA (JP): The country's gross domestic product (GDP) rose by 1.54 percent in the third quarter of this year compared to the second quarter: Another sign that the economy is improving, according to the Central Bureau of Statistics (BPS).

BPS reported here on Monday that the third quarter GDP growth was up by 0.54 percent compared to the same period last year.

BPS's chief Sugito Suwito said the growth in the July- September period was led by the mining, transportation and communication sectors.

"Assuming that the economy will continue to post positive growth in the fourth quarter, full-year 1999 GDP is expected to grow by 0.12 percent compared to last year," BPS chief Sugito Suwito told reporters at a media conference.

Sugito expects GDP to grow by 1.03 percent in the fourth quarter 1999 compared to the third quarter.

The economy contracted by more than 13 percent in 1998 as the economic crisis that started in the middle of 1997 deepened. But GDP started to grow in the second quarter of this year at 1.82 percent compared to the same period last year.

BPS said the 1999 GDP estimate based on current prices was Rp 1,116.4 trillion (about US$159.5 billion) or a GDP per capita of Rp 5.4 million ($770).

Based on the 1993 constant price, the 1999 GDP was Rp 376.5 trillion or up 0.12 percent compared to Rp 376.1 trillion, BPS added.

"This is a good sign. The BPS' GDP figure is even better than ours," said Bank Indonesia deputy governor Achjar Iljas, who is also responsible for the central bank's statistics.

The central bank had earlier predicted third quarter GDP at 0.2 percent, and full year GDP growth of between minus 1 percent and zero.

Analysts also welcomed the rise.

"This is a good sign. The economy is fundamentally improving," said Budi Hikmat, an economist at PT Bahana Securities.

He also said the GDP structure reflected greater confidence in the business sector.

BPS said fixed capital formation in the third quarter increased by 2.14 percent compared to the second quarter, and its portion in the GDP increased from 18.42 percent to 19.11 percent.

But Sugito said although this indicated that the real sector had started to grow, the portion of the fixed capital formation in the GDP was relatively small compared to 35 percent in Thailand and South Korea, 32 percent in Malaysia and 25 percent in the Philippines.

"This means that investment in our economy is still low," he said.

Sugito also dismissed earlier suggestions that the deflationary trend in the economy since March was due particularly to the declining purchasing power of households.

He pointed out that the household consumption expenditure component in the GDP grew by 0.95 percent in the third quarter compared to the second quarter, and grew by 6.42 percent in the third quarter of this year compared to the same quarter of last year.

"This means that household consumption expenditure has not declined," Sugito said.

He added household consumption expenditure based on the 1993 constant price increased to Rp 67.9 trillion in the third quarter from Rp 67.3 trillion in the second quarter, but based on current prices it declined to Rp 200.1 trillion from Rp 203.8 trillion.

"This reflects that the volume of goods and service consumed by households have tended to increase, but have been purchased at relatively lower prices," Sugito said, pointing to the low inflation in the third quarter.

BPS said the mining sector grew by 4.30 percent in the third quarter of the year from the second quarter, and 0.62 percent from the third quarter of last year.

The growth in the mining sector was mostly due to the improving non-oil, gas and mining industries, BPS said.

It said the manufacturing sector grew by 3.40 percent in the third quarter from the second quarter and contracted by 0.4 percent compared to the same quarter last year.

BPS reported that the electricity, gas and water sectors grew by 2.90 percent in the third quarter compared to the second quarter, up 9.34 percent compared to the same period last year.

The bureau said that trade, hotel and restaurant sectors grew by 3.49 percent in the third quarter from the second quarter, and 3.86 percent from the same period last year.

Transportation and communications grew by 3.82 percent on a quarter to quarter basis, and 8.39 percent on a year to year basis, the bureau said.

The financial, rental and service sectors grew by 1.14 percent in the third quarter from the second quarter, but had contracted by 5.51 percent compared to the same quarter last year, BPS said.

BPS also said the agriculture sector contracted 4.60 percent during the third quarter of the year compared with the second quarter, down 4.54 percent from the third quarter last year. (rei)