RI'S ECONOMY PREDICTED TO IMPROVE AFTER ELECTIONS

By Andi Abdussalam

Jakarta, June 7 (Antara) - Indonesia's economic growth which was recorded at 5.21 percent in the first quarter of this year, is expected to improve beginning the second quarter and reach 5.5 percent by the end of the year.          In the second quarter, economic growth is predicted at about 5.3 percent, which is only a slight increase, and does not live up to the expectations of high growth in the face of this year's general elections, where people would spend a lot of money on election logistics.          The legislative elections were held last April 9, while the presidential race will be held July 9, 2014.          Actually, the 5.5 percent target is a revised figure.          Earlier, Finance Minister Chatib Basri said the government would reduce the assumed economic growth rate in the draft revision of the 2014 state budget to 5.5 percent, from 6.0 percent mentioned previously.          "The government would revise growth targets because the economy grew relatively slowly in the first quarter. The forecast is being revised from 6.0 per cent to 5.5 percent for 2014, because the first-quarter growth was 5.21 percent," he said.          The country's economy would grow 5.3 percent in the second quarter, higher than the growth of 5.21 percent in the first quarter, as there is now a slight increase in the growth, Deputy Governor of Bank Indonesia (BI/the central bank) Perry Warjiyo predicted here on Friday.          The economic growth in the second quarter of this year will be driven by household consumption and investment, Perry Warjiyo claimed.         "The household consumption and investment growth is still consistent with the economic growth in 2014," Perry added.          He attributed the increase in the second quarter to seasonal factors like the Islamic fasting month of Idul Fitri.            Economic growth slowed down in the first quarter of this year compared to the previous three-month period, when the economy expanded 5.72 percent year-on-year.          The economy is expected to improve in the second quarter, fueled by a better export performance after the Indonesian economy contracted earlier this year, he added.          "We hope our exports will increase in the second quarter after falling sharply in the first. Hopefully, our exports will recover, while the others will remain more or less similar," he said.          ¿Real exports (goods and services) would grow 8.1 to 8.5 percent. In fact, in the first quarter the growth of real exports was only between 1.5 percent and 1.9 percent,¿ BI Governor Agus Martowardojo said.         "The drop in real exports was caused by three factors, namely slow domestic demand, low price of export commodities and impact of the implementation of the law on minerals and coal," he said.         In the first quarter, Indonesia's economy slowed due to contraction of real exports. The economy grew 5.21 percent in the first quarter year-on-year, down from 5.72 percent in the fourth quarter of 2013 and from Bank Indonesia's initial forecast.          The contraction of real exports was mainly caused by a decline in mining exports such as coal and mineral concentrate among others, due to weak demand, especially from China. A price drop and the temporary impact of the ban on raw mineral exports also played their part.          Based on Bank Indonesia's assessment, global economic recovery is still continuing. Improvement in global economic conditions is primarily driven by economic conditions in advanced countries such as the United States and Europe, as the impact of the monetary stimulus is still continuing.          The improvement in global economic conditions had led to an increase in the volume of world trade, he explained.       "However, China's growth had slowed after it implemented a policy to balance its economy. The price of commodities also tended to decline, especially that of rubber, copper and coal," he said.          BI has predicted that the economy would grow between 5.1 percent and 5.5 percent, after revising its previous targets that ranged between 5.5 percent and 5.9 percent.          For 2015, Indonesia's economy is predicted to grow between 5.8 and 6.3 percent, which is higher than this year's estimate of 5.5 percent.          The country's economic growth in 2015 will increase to 5.8 percent as compared to the government¿s prediction of 5.5 percent in 2014, according to Standard Chartered Bank (SCB).          "We are confident that Indonesia's economic growth will increase to 5.8 percent next year from this year's prediction of 5.5 percent," SCB chief economist Eric Sugandi said on Friday.          National Development Planning Minister Armida Alisjahbana had said last month that based on the government work plan 2015, the economic growth projection is between 5.5 percent and 6.3 percent.          The SCB prediction of 5.8 percent is actually still within the spread of the government work plan target which is between 5.5 percent and 6.8 percent.           The economy would grow better in 2015 as there would no longer be uncertainties after the new president is elected (in 2014), Sugandi said.     "The relations between the executive and the legislative branches of the state are predicted to run smoothly," he added. ***2*** (T.A014/) (INE) Edited by INE (T.SYS/A/BESSR/A. Abdussalam) 07-06-2014 17:02: