Indonesia GDP Growth Probably Region’s Fastest in First Quarter 2009-05-14 17:01:00.0 GMT

Indonesia GDP Growth Probably Region’s Fastest in First Quarter
2009-05-14 17:01:00.0 GMT


By Aloysius Unditu and Mike Munoz
May 15 (Bloomberg) -- Indonesia’s economy probably grew at
the fastest pace in Southeast Asia last quarter as buoyant local
spending helped the nation fend off the global recession.
Gross domestic product expanded 4.3 percent in the three
months to March 31 from a year earlier, compared with a 5.2
percent gain in the previous quarter, according to the median
forecast of 19 economists in a Bloomberg News survey. The
statistics bureau is due to release the data in Jakarta today.
Indonesia has been less affected than its neighbors by the
worst global slump since World War II as it isn’t as reliant on
exports as other Asian nations. Singapore’s economy shrank the
most since at least 1975 in the first quarter and Thailand’s
Finance Minister Korn Chatikavanij estimates a “pretty bloody”
GDP contraction of as much as 6 percent in the same period.
“Indonesia is one of the least external-demand-dependent
economies in the region,” said Enoch Fung, an economist at
Goldman Sachs Group Inc. “The resilience of domestic demand
will remain the bedrock to Indonesia’s growth recovery.”
Goldman Sachs yesterday raised its 2009 GDP forecast for
Indonesia to 3.5 percent from a previous estimate of 2.5 percent.
Growth will accelerate to 4.5 percent next year, compared with
an earlier prediction of 4 percent, Fung said in a research note.
Consumer confidence in Southeast Asia’s largest economy
soared to a four-year high in April, according to a central bank
survey of more than 4,300 households in 16 cities. Respondents
expected “relatively favorable” incomes over the next six
months and were more willing to spend their money on durable
goods, the Bank Indonesia survey showed.

‘Recovering Swiftly’

Rising confidence in Indonesia’s growth prospects, and
investor speculation that demand for emerging-market assets will
increase as the global economy recovers from a recession, has
buoyed the nation’s stocks and the rupiah.
The benchmark Jakarta stock index has climbed 34 percent
since the start of the year and the rupiah was this week trading
near the highest level in six months after Finance Minister Sri
Mulyani Indrawati said May 12 that Indonesia’s economy may
expand 5 percent to 6 percent next year.
“There appears to be pockets of resilience in the economy
and consumer confidence is recovering swiftly,” said Anton
Gunawan, the Jakarta-based chief economist at PT Bank Danamon
Indonesia. “The deceleration in economic growth is unlikely to
be very severe.”
Other Southeast Asian economies are nor faring as well.
Vietnamese GDP expanded 3.1 percent in the three months to March
31 from a year earlier, the weakest pace since quarterly
statistics were first available in 1999. The Philippine economy
likely grew between 2.1 percent and 3.1 percent in the first
quarter, Economic Planning Secretary Ralph Recto said April 20.

Election Spending

Indonesia’s $433 billion economy may also benefit from
spending on this year’s parliamentary and presidential elections,
said economists including Juniman from PT Bank Internasional
Indonesia in Jakarta.
“This type of spending really helped the economy from
dipping further and offset a fall in exports and investment,”
said Juniman, who like many Indonesians only uses one name.
“Foreign investors still have a perception that they will only
come to Indonesia if they are certain about political stability
and security.”
President Susilo Bambang Yudhoyono’s Democrat Party won 148
seats in the 560-member House of Representatives in last month’s
elections. That’s enough under Indonesian law to allow the party
to pick a candidate to run in July’s presidential poll.

Interest Rates

Election spending by political parties this year is
estimated by analysts including Eric Sugandi, from Standard
Chartered Bank in Jakarta, to be worth the equivalent of about 1
percent of Indonesia’s GDP. Separately, Yudhoyono’s government
has unveiled stimulus measures worth 71.3 trillion rupiah to
help boost growth this year.
Lower borrowing costs are also encouraging consumers to
spend. Bank Indonesia has cut its benchmark interest rate for
six straight months, with Governor Boediono last lowering the
key rate to 7.25 percent from 7.5 percent on May 5.
Motorcycle sales in Indonesia rose in March for a second
straight month, with 435,881 units sold, according to a report
from the Indonesian Automotive Industries Association issued by
PT Astra International.
PT Semen Gresik’s first-quarter profit rose 31 percent from
a year earlier as the nation’s biggest cement maker reported a
surge in sales to 3.23 trillion rupiah from 2.56 trillion rupiah.
Sales at PT Indofood Sukses Makmur, Indonesia’s largest instant-
noodle maker, rose to 8.91 trillion rupiah from 8.85 trillion
rupiah in the same period.
“A domestic recovery will hold the key to a sustainable
growth recovery,” said Fung from Goldman Sachs.

*T
Indonesia’s First Quarter GDP Forecasts: Survey (Table)
==============================================================
1Q 1Q
1Q 1Q GDP Priv Govt 1Q
Firm QoQ YoY 2009 Cons Cons Exports
==============================================================
Median 1.50% 4.27% 3.93% 4.16% 15.20% -11.09%
Average 1.45% 4.02% 3.91% 4.27% 15.95% -13.40%
High 1.81% 5.20% 5.30% 6.00% 36.20% 1.04%
Low 0.32% 0.90% 2.50% 2.50% 3.94% -32.00%
Number of Estimate 11 19 14 10 9 9
==============================================================
Action Economics 1.40% 4.40% 3.50% 4.80% -- -20.00%
ATR-Kim Eng -- 5.20% 5.30% -- -- --
Bahana Securities 1.30% 3.90% 3.40% -- -- --
Bank Central Asia 1.50% 4.40% 4.20% -- -- --
Bank Danamon 1.74% 4.50% 4.27% -- -- --
Bank Intl Indonesia 1.51% 4.27% 3.85% 3.64% 15.35% -11.09%
BNI Securities 1.72% 4.48% 4.15% 6.00% 15.20% -31.10%
Capital Economics -- 3.90% -- -- -- --
CIMB Niaga Bank 1.40% 4.15% 3.80% 4.57% 3.94% 1.04%
Danareksa Securities 1.81% 4.57% 4.77% 4.02% 22.37% -6.14%
HSBC -- 3.20% 2.50% 4.00% 9.50% --
ING Groep NV 1.40% 4.10% -- -- -- --
Mandiri Securities -- 4.00% 3.80% 4.00% 10.50% -12.40%
Moody’s Economy.com -- 3.78% 2.80% 4.30% 18.50% -5.10%
Nomura Singapore -- 0.90% -- -- -- --
Reuters IFR -- 4.30% -- -- -- --
Samuel Sekuritas 0.32% 3.04% 4.42% 2.50% 12.00% -32.00%
Standard Chartered 1.80% 4.60% 4.00% 4.90% 36.20% -3.80%
UBS -- 4.60% -- -- -- --