Indonesia′s economic growth in 2015 can be over 5%: Observer

11 May, 2015 | Source: ANTARA NEWS

Bandung (ANTARA News) - Indonesias economic growth in 2015 could still reach a mark over 5 percent, although in the first quarter of the year, it grew by only 4.7 percent, an observer said.

"I am still convinced that the economic growth this year will be over 5 percent," economic observer Destry Damayanti stated here on Saturday.

She is certain that infrastructure development projects will be expedited to ensure that economic growth reaches 5.3 percent by the end of the year.

Damayanti added that the relatively low growth in the first quarter of 2015 was due to peoples low purchasing power because they still felt the presence of uncertainties.

In such a condition, businesses also adopted the wait and watch attitude and are doubtful about whether the government will realize their development projects.

"We are not talking about the governments need to complete the infrastructure projects because it needs time to do so. However, the market would like to see progress, such as land clearance, which would give confidence to investors," she explained.

She added that foreign investors still saw Indonesias economy as one that has room to grow further. They are now following the developmental projects planned by the government.

Moreover, Bank Indonesia (BI) is confident that the countrys economy will grow as expected, with maximum government contribution in budget spending in 2015.

"The economic growth target will remain the same at 5.4 to 5.6 percent," Governor of BI Agus Martowardojo said at the Asia Summit of the Institute of International Finance here on Thursday.

Martowardojo added that the target will be reached through large government spending on infrastructure development to boost investment and consumption as the drivers of economic growth.

He hopes that structural reforms to control inflation and reduce the current account deficit continue to be implemented to offset external negative sentiments.

In addition, he pointed out that the global economic slowdown had yet to be closely observed, especially with the rising value of the U. S. dollar and the falling prices of commodities.

There is also the risk of capital outflows from the Indonesian stock market, he cautioned.

The BI governor also warned of the impact the plan to abolish subsidy for liquefied petroleum gas and to increase electricity tariffs will have on inflation.

"The plan must be implemented carefully to keep inflation under control at around 4 percent more or less," he emphasized.

Furthermore, the Central Statistics Agency (BPS) announced on Tuesday that the Indonesian economy grew at a slower pace of 4.71 percent in the first quarter of 2015 as compared to 5.14 percent in the corresponding period last year.

"The economic growth of China, an export destination of Indonesia, coupled with the low global oil prices and declining export and import performances affected the economic performance in the first quarter," Chairman of the BPS Suryamin explained during a press conference.

On the production side, the information and communication sector registered the highest growth, contributing 10.53 percent to economic growth, while household consumption grew 5.01 percent.

Compared to the previous quarter, the economic growth in the first quarter of 2015 fell by 0.18 percent from 5.02 percent.

However, BI has predicted that the national economic growth will rebound in the second quarter of 2015 after contracting to 4.71 percent in the first quarter.

"Government spending is expected to increase in the second quarter of 2015, which will serve as a stimulus to boost economic growth," Executive Director of the Communications Department of BI Tirta Segara affirmed.

Segara has forecast that investment will increase in the remaining three quarters as well, along with increased government spending on infrastructure projects.

"This is in line with the progress report on the construction of various infrastructure projects," he said.

After all, the national economy still runs the risk of moving closer to the lower target limit of 5.4 to 5.8 percent this year, he remarked.

 

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