ECONOMY EXPECTED TO GROW 3.7 PCT IN Q2 2009

Jakarta, July 25 (ANTARA) - The government estimates the country's economic growth in the second quarter of 2009 will reach 3.7 percent only, or lower than that in the first quarter, a finance ministry official said.

"Our economic growth projection is 3.7 percent for the first quarter of 2008, or lower than the first quarter of 2009," Head of Finance Ministry's Fiscal Policy Affairs Anggito Abimanyu said here over the weekend.

He said economic growth in the second quarter would be lower than in the first quarter due to two factors.

Abimanyu said the first factor was that the economic growth basis in the second quarter of 2008 was relatively high. "If it is based on a calculation with a high basis it would have effect on the present rate of economic growth," he said.

He said that the second factor was that the economic condition in the first quarter of 2009 was relatively conducive such as low inflation following the cut in the fuel oil prices, the provision of direct cash assistance to the poor and other fiscal expansions.

"In the second quarter of 2008, these factors were already non-existent. The legislative election preparations were also already completed so that public consumption has declined," he said.

He said however that the projected 3.7 percent economic growth in the second quarter of 2009 was supported by the relatively still strong consumption level.

"We also noticed that there is also an increase in the investment. Investment began to show its dynamism in the second quarter," he said.

He said that the strong inflow of capital became the main cause of the strengthening of the rupiah exchange rate against the US dollar and of the strengthening in the direct foreign investment (FDI).

The Central Bureau of Statistics (BPS) made records on the economic growth per three months. For the realization in the first quarter of 2009, the BPS has reported it in the middle of May 2009 while that in the second quarter the statistics bureau report it in middle of August 2009.