Indonesian economy seen further signs of decline

Indonesia, the largest economy in Southeast Asia, is coming under increasing strain from the financial crisis with new projections showing plummeting exports and slowing growth.

Bank Indonesia Deputy Chief Hartadi Sarwono said Thursday economic growth may slow to below 4 percent in 2009, down from 6.1 percent last year, due largely to declining exports.

Exports could contract by up to 28 percent annually in 2009, he said, after falling more than 30 percent in January.

Indonesia is a major exporter of coal, gold, palm oil, rubber and other precious metals. It also manufacturers textiles, shoes, electronics, automobiles and motorcycles.

Although Indonesia is relatively less reliant on exports than other Asian nations, declining shipments to overseas markets has started dragging down domestic consumption and gross domestic product.

"We have to see the risk of a (GDP) fall to below 4 percent, but BI's growth projection remains 4 percent because it's too early to make a revision," Sarwono said.

Indonesia, which has weathered the global crisis better than many Asian countries so far, has allocated funds for a fiscal stimulus package but those measures have yet to take effect.

A steep fall in commodities prices is also hurting businesses, which have been forced to lay off hundreds of thousands of workers. (AP)