Jakarta – Indonesia's economy is forecast to grow 3.86 percent year-on-year in the third quarter and 5.76 percent year-on-year in the fourth due to expected higher output ahead of year-end celebrations, Finance Minister Boediono said on Wednesday.

Boediono, speaking at a parliamentary hearing, also slightly revised down the full-year 2002 economic growth forecast to 3.98 percent from 4.0 percent. Indonesia posted GDP growth of 3.32 percent last year, while year-on-year growth in the second quarter was 3.51 percent.

"[We see an] acceleration in economic activity in the fourth quarter because there will be various religious holidays," Boediono told legislators. The end of the Muslim fasting month of Ramadan falls in early December.

The full-year economic growth revision came just a few days after the Finance Ministry proposed to parliament to revise some key economic forecasts for this year, including a lower budget deficit.

The proposed revisions included higher inflation and interest rates and a weaker rupiah for the full year, a pessimistic outlook given the recent improvements in these indicators. The GDP growth forecast had been unchanged at four percent.

Several economists have said the government was unlikely to achieve the 4.0 percent economic growth target for the full year despite sustained private consumption due partly to weak foreign and domestic investment and a lack of fiscal stimulus. Under the proposed revisions, the rupiah is seen at an average of 9,280 per dollar compared with the current forecast of 9,000, interest rates are seen at 15.74 percent against 14 percent, while inflation is targeted at 9.5 percent from 9.0 percent.

The budget deficit is forecast at 40.5 trillion rupiah ($4.58 billion) for the year against 42.1 trillion in the current forecast.

Some economists have said the price for the lower deficit was too high, and in particular would mean less money being spent on infrastructure and other badly needed projects across the world's fourth most populous country.