Tuesday, September 15, 2009

World Bank upgrades Indonesia's economic growth prediction to 4.3%

Compiled from The World Bank, Xinhua, detik.com

The World bank (WB) has increased Indonesia's economic growth estimation to 4.3 percent this year from the initial 3.4 percent following the world's improving economy.

"We predict that the gradual economic improvement that persisted amid this year would continue in the next one and a half year. The increasing domestic demands would spur the economic growth at the same time with the disbursement of the government's fiscal stimulus in 2010. The investors' trust would be recovered," WB senior economist Subham Chauduri said a press release.

After the 4.3 percent economic growth this year, the WB predicted that Indonesia's economic growth would slowly increase to 5.4 in 2010 with inflation predicted to rise up to 4.7 percent in the remaining months of this year and goes up to 5.6 percent next year.

Subham Chauduri also said that the poverty rate would be reducing by the end of the government's schedule to end its cash assistance for the poor in the country.

Thanks to the massive domestic consumption due to the conduction of legislative elections and presidential election, the WB's learned that economy recovery signals in Indonesia persisted early this year, or earlier than the other countries in the world lingered by economic crisis, he added.

Meanwhile WB Indonesia representative, Joachim von Amsberg, said that the large Indonesian market, strong economy condition at the early days of economic crisis and the government's correct policy in issuing the stimulus program have saved the country from the bad impacts of global crisis.

"All of those factors enable Indonesia to survive, able to overcome the problems caused by the crisis better than other countries in the region," Joachim said.


-- Indonesia's economic recovery has gained steam following the turbulence of the start of the year

-- Domestic consumption has remained robust

-- ..although investors have become very cautious

-- The banking sector has proved far sturdier than many commentators expected, although new loan approvals have remained constrained

-- Financial markets have continued strengthening through mid-2009

-- ...and portfolio investors have returned to Indonesian markets. Rollover rates on debt have been high, leaving the balance of payments in a small surplus in Q2

-- Inflation, after being more subdued than expected earlier in the year, has started to rise since August

-- Employment has grown at a faster rate than the working age population, although few of the new jobs are formal

-- Public finances in the first half of 2009 have been more stimulatory than in recent years

-- ... and there is scope for more ambitious spending in 2010 than the government's proposed budget envisages

-- The trend of a gradually recovering economy should continue into 2011, with accelerating output, and prices, and the end of the government's cash transfers slowing the gains in poverty

View the report:
Indonesia Economic Update (Sept 2009: Clearing Skies

PRESS RELEASE: Skies Clear Up for Indonesia, as Global Crisis Winds Down