Friday, April 2, 2004
Indonesia agency sees improving economy through 2006
Reuters Jakarta, March 30
Indonesia's economy should improve through 2006, the state planning agency said on Tuesday, but its annual growth forecasts fell short of levels many economists see as necessary to keep unemployment from rising.
The economy is expected to grow by 4.5 per cent this year, five per cent in 2005 and 5.5 per cent in 2006, the agency said in a report. Gross domestic product grew 4.1 per cent in 2003.
The government has forecast 4.8 per cent economic growth in 2004 in its annual budget, but some senior government officials say growth could reach five per cent. Private economists expect growth of between four and 4.5 per cent this year.
"Steps to boost investments and non-oil-and-gas exports will gradually push economic growth from five per cent in 2005 to 5.5 per cent in 2006," the planning agency report said.
That would still be less than the six per cent many analysts say is the minimum needed to keep up with increases in the labour force in Indonesia, where some estimates put the number of unemployed and underemployed at 40 per cent of the workforce.
Private consumption was no longer expected to be the major driver of growth in Southeast Asia's largest economy, also the fourth-most populous country in the world.
Consumption was projected to increase by 4.8 per cent this year and 3.6 per cent in 2006.
The government was expected to reduce the budget deficit from 1.2 per cent of GDP in 2004 to 0.6 per cent in 2005 and 0.1 per cent in 2006. The agency said prudent monetary policy and ample supply of goods and services were expected to keep inflation manageable.
With inflation contained and a stable exchange rate, interest rates on the central bank's benchmark three-month certificates were expected to hover between seven and eight per cent.
© Hindustan Times Ltd. 2004.