Benjamin Fisher, the bank's country programme coordinator for Indonesia, told a seminar that Indonesia could see the beginnings of growth of up to 2 per cent in the financial year ending June 30, 2000.

``The Indonesian recovery is going to surprise a lot of pundits,'' Fisher told the Trade Organisation Asia 2000 seminar. But the news in the short term was not good, with the economic contraction continuing this financial year, Fisher predicted.

Since July last year, confidence in the Indonesian economy has collapsed and domestic demand has plummeted. Unemployment and inflation have soared.

The Indonesian rupiah has depreciated by more than 80 per cent against the dollar and high foreign debt levels have left most Indonesian companies technically insolvent.

Fisher said the prospects for Indonesia look good if stability and reform can bemaintained under the new leadership of president BJ Habibie.

The country's natural resources were very strong and the Indonesian economy at the time of the crisis had not been nearly as inefficient as people believed, he said.

However, corruption remains a serious problem, as does the flight of foreign capital. The Indonesian government could not afford to be complacent about implementing reforms, Fisher said.