[Kabar-indonesia] Credit Suisse Upgardes Indonesia GDP Forecast to 5.6% on Consumption

[JoyoNews at aol.com]

also: Indonesian economic growth target up to 6.5pct for 2007

Indonesia 2006 GDP forecast raised to 
5.6 pct led by consumption - Credit Suisse

JAKARTA, June 22 (XFN-ASIA) - Credit Suisse has upgraded its real 
GDP growth forecast for Indonesia this year to 5.6 pct from its previous
estimate of 5.0 pct, citing expected acceleration in consumer spending
growth in the second half of the year.

Falling interest rates and inflation are predicted to boost
consumption, it said in a "bullish" report on Indonesia.

But it kept its forecast for 2007 GDP growth at 6.0 pct.

The Credit Suisse forecasts, however, are lower than the government's
official revised GDP growth forecasts of 5.9 pct for this year and 6.3
pct for next year.

Last year Indonesia's economy grew by 5.6 pct, with private
consumption rising 4.0 pct, fixed investment up 9.9 pct, government
spending up 8.1 pct, exports rising 8.6 pct and imports up 12.4 pct.

In the first quarter this year, GDP grew at a slower pace of 4.59 pct
year-on-year compared to 4.9 pct in the previous quarter and against a
revised 6.25 pct a year earlier, as consumer purchasing power
weakened.

"We are upgrading our 2006 private consumption growth forecast to 4.4
pct from 3.5 pct," it said.

"Given our expectation that inflation may subside in the second half,
real incomes may rise and stimulate consumer spending," it added.

It cut its year-end inflation forecast to 6.8 pct from 8.0 pct. Last
year, the inflation rate hit a high 17.1 pct.

The report said retail sales are already rising, supported by a
pick-up in car and motorcycle sales. May motorcycle sales rose 18.5
pct month-on-month after declining 1.9 pct in April, while car sales
rose 1.9 pct in May after falling 15.9 pct in April.

"Forward-looking surveys for consumer spending on durable goods and a
rebound in import growth indicate a recovery in domestic demand is
already under way.

"Imports of consumer goods, capital goods and raw materials are
already rising and serve as a good indication that consumer and
investment spending are likely to recover in the second half," the
report said.

It said consumer spending "could also be boosted if, as we project,
the one-month Bank Indonesia Certificate (SBI) interest rate falls to
10.75 pct by end-2006 from the current 12.5 pct."

It noted that lending rates for cars, motorcycles, and residential
property are already falling.

"We expect lending rates to fall by 100-200 basis points from current
levels over the next 6-12 months."

It added that support for domestic demand may also come from Eastern
Indonesia in addition to the main business centers of Java and
Sumatra, Kalimantan, Sulawesi, Bali, Maluku and Papua representing
Eastern Indonesia.

Eastern Indonesia accounts for around 28 pct of national GDP and 25
pct of national domestic demand.

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Indonesian economic growth target up to 6.5pct for 2007

JAKARTA, June 22 (Asia Pulse/Antara) - The budget committee of the
House of Representatives, along with the government, agreed that the
economic growth target for 2007 ranges from 6 to 6.5 per cent.

This compares to economic growth assumed in the 2006 revised State
Budget of 5.9 per cent.

The agreement was reached at a working meeting of the House budget
committee and the government at the parliament building here until
Wednesday night.

The meeting chaired by committee's chief Emir Muis was attended by
Finance Minister Sri Mulyani Indrawati, State Minister of National
Development Planning/Head of the National Development Planning Agency
Paskah Suzetta, and Governor of Bank Indonesia Burhanuddin Abdullah.

The meeting also agreed that the inflation rate is assumed at 6 to 8
per cent, the exchange rate at Rp9000 to Rp9500 per US dollar, the
interest rate of three-month Bank Indonesia promissory notes at 8.5 to
9.5 per cent, oil price at $US57 to $US65 per barrel, and oil
production at one million barrels per day.

"These assumptions will serve as reference in drawing up a State
Budget Bill for fiscal 2007 and its Financial Note for submission to
the government and House of Representatives on August 16, 2006," Head
of the House budget committee's working commission Bachrudin Nasori
said when presenting the result of the discussion of the commission at
the meeting.

Earlier during a cabinet session, the government decided that
assumption on economic growth for drawing up of the 2007 Draft State
Budget stands at 6.3 per cent, exchange rate at Rp9400 per US dollar,
inflation rate 6.5 per cent, 3-month BI promissory note 8.5 per cent,
oil price $US60 dollars per barrel, and oil production one million
barrels a day.

In the meantime, for the drawing up of the 2006 revised State Budget
the government decided that economic growth reached 5.9 per cent,
exchange rate Rp9300 per US dollar, inflation rate 8 per cent, oil
price 62 US dollars per barrel, 3-month BI promissory note 12 per
cent, and oil production one million barrels per day.

With regard to deficit, the government set it at 0.9 per cent of GDP
or Rp33.3 trillion, compared to the assumption for the revised state
budget set at 1.4 per cent of the GDP or Rp42.4 trillion.

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Joyo Indonesia News Service
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