Indonesia GDP Growth Probably Region's Fastest in First Quarter 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.
