Posted on 10 Nov 2009
Ahead of the official announcement from the Central Statistics Agency, economists estimated the country's economy grew between 3.9 percent and 4 percent in the third quarter, lower than the government's estimate.
"We expected economic growth to have accelerated in the third quarter of 2009 to 4.05 percent on a year-on-year basis," Bank Danamon economists Anton Gunawan and Helmi Arman said. "Consumption, investment and export growth may have improved."
They said year-on-year growth in investment might have started to increase in the third quarter this year, as cement consumption and commercial vehicle sales had risen. They also said household spending might have increased too as retail sales growth had climbed.
Finance Minister Sri Mulyani Indrawati had estimated the economy would grow between 4.1 percent and 4.2 percent in the third quarter this year, then accelerate to between 4.6 percent and 4.7 percent in the final quarter.
Mulyani said the economy might have encountered slow growth in the third quarter due to a high year basis.
Overall, the full-year growth may reach 4.3 percent, she said.
The Central Statistics Agency will announce the official figure of growth in the third-quarter on Nov. 10.
Standard Chartered Bank economist Eric Sugandi said growth in the third quarter this year was likely slower than the 3.9 percent growth a year earlier because of the high year basis.
"The third-quarter drivers were most likely household consumption growth *due to the low inflation*, net exports and government spending," he said.
As of this year's third quarter, the government only spent 35 percent of the Rp 12.2 trillion (US$1.29 billion) infrastructure stimulus, Coordinating Economic Minister Hatta Radjasa said on Oct. 31. Although he remained confident the government could spend the total stimulus amount by the end of this year.
Within 100 days of the new government taking office, led by President Susilo Bambang Yudhoyono and Vice President Boediono, opening the bottleneck is the main priority, said Hatta.
Helmi said a too-low growth figure in the third quarter of 2009 might "encourage policy makers to use non-conventional plans to boost lending, such as restricting bank profit margins."
Bank Indonesia Acting Governor Darmin Nasution said last week banks would be asked to cut interest rates to lower lending rates. Lower lending rates may spur lending growth as borrowing costs for businesses ease.
Fourteen major banks agreed on Aug. 20 to cut their deposit rates to 150 basis points above the BI rate within three months. After three months they will cut the rates down further to 50 basis points above the BI rate, which currently stands at 6.5 percent.
