Indonesia Will Lead SE Asian Economic Growth in Next Five Years: OECD

05 December, 2011 | Source: The Jakarta Post

With its large domestic market, Indonesia is expected to lead economic growth in six Southeast Asian countries over the next five years despite the slowdown in the global economy, the OECD says.

The Organization for Economic Cooperation and Development (OECD) estimates in its Southeast Asian Economic Outlook that Indonesia’s economic growth will move up an average of 6.6 percent between 2012 and 2016 from 6.3 percent in 2011 and 6.1 percent in 2010.

Indonesia’s average GDP during the five-year period will be the highest in the six major Southeast Asian countries, followed by Malaysia with an average of 6.3 percent, Vietnam with 5.3 percent, the Philippines with 4.9 percent, Singapore with 4.6 percent and Thailand with 4.5 percent, the organization estimates.

The organization also estimates that Indonesia’s GDP will grow at 6.3 percent in 2011, also the highest among the six countries followed by Vietnam at 5.9 percent, Singapore at 5.6 percent, Malaysia at 4.6 percent and the Philippines at 4.5 percent.

“Amid the global economic crisis, growth for the six Southeast Asian countries will moderate towards the first quarter of 2012 but remain robust through 2016,” OECD Development Center director Mario Pezzini told a press conference on Tuesday in Jakarta after the launching of OECD report on the Southeast Asian Economic Outlook 2011/2012.

He said that Indonesia would lead the region’s growth and keep its strong momentum thanks to its buoyant domestic demand. Underpinned by relatively strong investment, growth prospects in Malaysia will also remain robust in the medium term, though slower than the pre-2008 level, the report said. The Philippine economy also shows resilience owing to domestic demand and workers remittance. Singapore’s growth rate is expected to moderate to a level below the 2003-07 rate, due largely to weaker global trade flows.

“The unprecedented scale of floods has added to downside risks to the near-term prospect of Thailand,” the report said, adding that the near-term growth prospect of Vietnam would be affected by the tightening of monetary policies.

Meanwhile, Bank Indonesia’s director for economic and monetary policy research Perry Warjiyo saw “downside risks” to its 6.5 percent economic growth forecast next year due to the global economic slowdown. He called for a fiscal stimulus boost to reduce the impact of the global slowdown.

“At the end of the day, how big the impact of global downturn is on Indonesia heavily depends on how much the fiscal stimulus will be,” he said.

The Asian Development Bank (ADB) and other financial institutions have expressed similar concerns, citing government spending as the source of growth that needs be boosted next year to spur the economic growth.

 

The Indonesian government plans to issue savings sukuk (Islamic bonds), series ST007, to expand the base of retail investors in the domestic financial market and finance green projects in the state budget (APBN).
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