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February 16, 2009

Indonesia: Non-oil exports likely to decline 20-30%
Indonesia's trade minister said on Saturday export volumes for non-oil and gas are set to fall 20-30 percent this year from 2008 as global trade slows, dealing a blow to Southeast Asia's biggest economy in an election year, reported Reuters.

Earlier this month, Trade Minister Mari Pangestu said Indonesia's non-oil and gas export growth target had been revised to below 4.3 percent for 2009. On Saturday she told reporters the outlook was worse.

"Based on container flow for January-February, exports volume this year may decline by between 20 to 30 percent. Non-oil and gas exports are expected to fall," Pangestu said.

She added that exports of automotive products and electronics would be worst hit.

Car exports through the Jakarta International Container Terminal, the country's largest shipping terminal, fell to 9,391 units in January, from 13,000 units in December 2008, Pangestu said, representing a decline of about 27 percent.

Earlier this week, Pangestu said that growth in total exports would slow to just 1-2.5 percent this year, from about 20 percent in 2008. The government had previously forecast total exports would grow 5 percent in 2009.

The government has proposed a 71.3 trillion rupiah ($6.1 billion) fiscal stimulus package to counter the effects of a global economic slowdown, and expects economic growth to slow to between 4 and 5 percent, from an estimated 6.2 percent in 2008.

While Indonesia's economy is less dependent on exports than some other Asian countries, millions of Indonesians are employed in export-related sectors and the prospect of big job losses is a concern for the government ahead of the April 9 general election and July 8 presidential election.

Indonesian exports include palm oil, tin, coal, copper, and rubber, and prices for many of these commodities have slumped.

Earlier this month, Indonesia reported that exports fell 20.6 percent to $8.69 billion in December from a year ago, the biggest drop in seven years.

Economists expect the central bank, Bank Indonesia, to continue its monetary easing cycle this year to try to boost economic growth.

Indonesia's central bank cut its key interest rate by 50 basis points to 8.25 percent in February, the third cut in three months, and indicated it may cut rates again to support growth.

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