GDP thought to have grown 4.2% in fourth quarter February 15, 2006Posted by ekon in makroekonomi.
GDP thought to have grown 4.2% in fourth quarter
Arijit Ghosh – 2006-02-15 10:57:07
February 15, 2006
The Indonesian economy probably expanded in the fourth quarter at its slowest pace in more than three years as higher borrowing costs curbed consumer spending.
Southeast Asia’s largest economy grew 4.2 percent from a year earlier after expanding 5.3 percent in the third quarter, according to the median forecast of 14 economists in a Bloomberg News survey. That’s the slowest since June 2002.The Central Statistics Agency (BPS) is due to release the report Wednesday.
Bank Indonesia raised its key interest rate six times from August to December to a three-year high of 12.75 percent to stem a plunge in the rupiah, prompting consumers to delay buying products, including cars and motorbikes. Some dealers for Yamaha Motor Co., the world’s second-largest motorcycle maker, this month cut down payment requirements by 60 percent to spur sales.
“People who purchase motorcycles have just enough money to pay installments,” said Gunadi Sindhuwinata, president of PT Indo-mobil Sukses International, the country’s second-largest auto retailer, which is planning to delay introducing at least one new motorcycle model. “Suddenly, when interest rates are hiked, they have to prioritize where they will put their money, for clothes, for food, education … motorcycles come last.”
Economic growth accelerated to 5.3 percent last year from 5.1 percent in 2004, according to 13 economists in the Bloomberg survey. Gross domestic product fell 2.7 percent in the fourth quarter from the previous three months, the survey said.
Domestic consumption makes up about 70 percent of gross domestic product, with some 40 million people surviving on about 40 U.S. cents a day.
Motorcycle sales dropped 3 percent in December from a year earlier, the first decline in eight years for the month. Sales of motorcycles, which reached a record in August, began slowing after the central bank started raising interest rates that month.
Meanwhile, car sales fell 41 percent in January from a year earlier, the biggest decline in almost seven years, according to the local unit of PT Astra International, the country’s biggest car retailer.
“Real discretionary spending has been cut to the bone,” said Michael Chambers, head of research at CLSA Ltd. in Jakarta. “That would gel with the sense we get in Indonesia of a very sharp drop in consumer durable purchases, motorcycles. If you go to electronics shops, you’ll see a sharp decline there as well.”
PT Chaya Motor, which sells Yamaha motorcycles in Jakarta, is requiring customers to pay Rp 600,000 (US$65) instead of their usual Rp 1.5 million down payment for the Vega-R motorcycle. The buyer then pays the balance at an interest rate of 24 percent over three years, said Rahma, a saleswoman at Chaya. Interest rates on property and vehicle loans vary from 16 to 24 percent, the central bank said.
To help counter a decline in domestic consumption, the government wants to attract about $10 billion in foreign direct investment this year, about 12 percent more than last year. President Susilo Bambang Yud-hoyono said the government would need about $430 billion in overseas investment by 2009 to help the economy expand by an average 6.6 percent.
As things stand, consumer durable companies will be pleased if they don’t grow at all this year.
“I hope we can manage zero growth,” said Indomobil’s Sindhuwinata.
Meanwhile, Choiril Maksum, director of BPS, said he was “shocked” after seeing the fourth-quarter economic data.
“We were shocked with the data for the fourth quarter compared with previous quarters,” Maksum told reporters Tuesday, without giving details.”Full year 2005 is far better than 2004 because to start the year we saw some good economic growth.”