Amril Arief(1*)

(1) Bank Indonesia Semarang
(*) Corresponding Author


Central Java’s economy in 2004 has a higher economic growth and inflation than 2003.
Economic growth on supply side was influenced by three economic sectors (trade, hotel &
restaurant, manufacturing industry, and services). On demand side, economic growth was
influenced by private consumption, government consumption, and export. The prior
determinance of inflation in 2004 is come from supply side: volatile foods and clothes (cost push inflation). On demand side, inflation was influenced by communication and financial services. Banking sector (commercial bank and rural bank) has a good performance in 2004. All of banking performance indicators were increased, i.e. total asset, total deposit, credit, and loan to deposits ratio. Meanwhile, ratio of non performing loans was declined.
Central Java’s export in 2002-2004 has increased significantly that be dominated by
four prime industries (textile, furniture, wearing apparel, and products of wood). The
contribution of four industries is 76,04% of total export. Businessmen and exporters have
been understood that high level competitiveness of the export commodities is major
precondition to compete in international market. This awareness makes optimism spirit of
businessmen to increase Central Java’s export performance.
Outlook of Central Java’s economy in 2005 is predicted will have a higher economic
growth with higher inflation than 2004. Two dominant economic sectors (manufacturing
industry sector and trade, hotel & restaurant sector) will lead its growth on supply side.
Private consumption, investment, and export will be a prime mover of growth on demand
side. The administered price, especially increasing of oil (BBM) price, will be a prior
determinance of inflation in 2005. Outlook of banking sector, especially on credit, also has
a good prospect. This is based on increasing trends of real sector and household needs,
stability of social and political condition, and infrastructure projects of central government
that will be supported by banking sector. Outlook of Central Java’s export in 2005 is
depend on performance of export commodities of four industries above. To realize it,
regional government of Central Java must create an export development program focusing on product quality improvement. Meanwhile, the linked institutions (public and private institutions) on export development must cooperate on implementing and sustainable program to realize an effective synergism.


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