There are predictions of further serious economic problems in Indonesia as the effects of political upheaval and the recent social unrest are calculated.

According to the latest official figures, the economy is likely to shrink by ten per cent this year with the construction and manufacturing sectors hit particularly hard.

Inflation is expected to rise to at least eighty per cent, while unemployment is forecast to rise to around seventeen per cent of the workforce.

Correspondents say the dire economic conditions have been compounded by poor weather, which has damaged harvests.

The new government said on Monday it would launch an inquiry into corruption during the rule of former President Suharto.