[Kabar-indonesia] Indonesia's Annual Q3 GDP Growth Fastest in a Year [+Malaysia]

[Joyo3]

also: Malaysia c.bank gov sees steady economic growth

Indonesia's annual Q3 GDP growth fastest in a year

By Adriana Nina Kusuma

JAKARTA, Nov. 16 (Reuters) - Indonesia's annual economic
growth accelerated at its fastest pace in a year in the
third quarter, underpinned by strong exports and steady
consumption, data showed on Thursday.

Southeast Asia's largest economy expanded in the third
quarter by 5.52 percent from a year earlier, broadly in line
with expectations for growth of 5.6 percent.

The latest figure indicated a steady pick up in annual
growth after the economic shocks of late 2005 when inflation
soared to more than 18 percent, forcing the central bank to
raise interest rates to 12.75 percent.

The country's finance minister had said she hoped annual
growth would top 5.5 percent in the third quarter, taking
full year growth to 5.6 percent.

The government put a forecast of 5.8 percent GDP growth for
2006.

"To reach the targeted 5.8 percent, the government has to
try hard in the fourth quarter. It will have to be above 6
percent year-on-year," Rusman Heriawan, head of the
statistics agency told a news conference.

Exports of goods and services expanded in the last quarter
by 12.05 percent from a year earlier, accelerating from 11.3
percent in the previous quarter's data, while the annual
pace of private consumption was flat at 2.99 percent.

"This shows that the effects of fiscal and monetary easing,
constant falls of interest rates are finally being felt by
the economy," Anung Roni Hascaryo, economist at AAA
Securities, told Reuters.

"What was hoped was that private consumption would recover
first. Current expectations will become even more positive
now."

LOWER RATES

Bank Indonesia, the central bank, has cut interest rates
from 12.75 percent in May to 10.25 percent in November as
inflation fell steadily, sparking hopes for a pick up in
consumer spending.

But some analysts said the central bank would now be more
cautious in cutting rates for fear of sparking an exodus of
capital.

Lim Susian, economist at DBS research group, said a 50 basis
point cut next month could cause concern among investors
that hold rupiah assets, particularly bonds.
"I suspect that the rate cuts will be more gradual at 25
basis points," Susian told Reuters.

However, Bank Indonesia governor Burhanuddin Abdullah said
before the GDP data was released that the country could see
single digit interest rates by the end of the year, adding
he was hopeful of meeting an economic growth target of 6.3
percent in 2007.

With rates currently at 10.25 percent, the governor's
remarks imply the central bank might cut rates by more than
25 basis points on Dec. 7, its last regular meeting this
year.

Economic growth slowed sharply in the fourth quarter of 2005
and the first quarter of 2006 after the central bank ramped
up interest rates to head off inflation resulting from a
rise in domestic fuel prices.

Annual inflation slumped to 6.29 percent last month, its
lowest in almost two years. Earlier in November, Bank
Indonesia made its sixth cut this year in the BI target
rate.

The World Bank said in a report earlier this week that the
Indonesian economy started to recover in the third quarter
from the inflation shocks of 2005.

Thursday's data showed the annual expansion in the third
quarter was faster than growth of 5.08 percent in the second
quarter and 4.8 percent in the first quarter.

The World Bank predicted the economy would grow 5.5 percent
this year, picking up to 6.5 percent next year as easing
monetary policy promotes public spending and private-sector
expansion.

(Additional reporting by Johannes Mantiri, Yoga Rusmana,
Esther Harini)

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Malaysia c.bank gov sees steady economic growth

JIMBARAN, Indonesia, Nov. 16 (Reuters) - Malaysia's central
bank governor said on Thursday the current level of the
country's interest rates is appropriate and that she sees
steady economic growth of around six percent next year.

Zeti Akhtar Aziz was speaking to reporters on the sidelines
of a seminar on emerging market economies in the resort
island of Bali.

"The current level of interest rates is appropriate under
this environment," Zeti said.

"We see Malaysia experiencing steady growth in 2007," she
also said.

Zeti said inflation was now moderating and had fallen from
4.8 percent to 3.3 percent.

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Joyo Indonesia News Service
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