Economic Growth Projection for Indonesia Revised Down

Wandrik Panca Adiguna
Wandrik Panca Adiguna - 17 Desember 2010  |  04:15 WIB

JAKARTA: The World Bank revises down its projection for Indonesia's economic growth by 0.1% to 5.9%.

World Bank Director to Indonesia Stefan Koeberle cited domestic factors such as the effect of weather on the agriculture and mining sectors as variables curbing Indonesia's economic growth. The World Bank also revised down its projection for Indonesia by 0.1% after it put into calculation GDP growth in the third quarter of 2010. "The soaring commodity prices and agriculture supply shock will affect domestic food prices, leading to higher inflation in November," he said as quoted from the World Bank report titled Quarterly Progress of Indonesian Economy released yesterday. Data by the Central Statistics Agency (BPS) showed November inflation hit 0.6%, soaring from 0.06% in October. The inflation in November was mostly contributed by soaring staple commodity prices, such as rice price. For next year, however, the World Bank estimated there would be an upward trend in investment. Moreover, private consumption was expected to be stronger, leading to higher economic growth than this year. Next year, Indonesia's economic growth is estimated at 6.2%, not yet to reach 7% projected by the government. The World Bank is of an opinion that Indonesia had to make investments in critical infrastructures and in job-creating economic activities to be able to meet an economic growth target of 7%. "The recently approved 2011 State Budget is a positive measure since it increases capital expenditure and contains additional measures to deal with barriers related to slow spending disbursement." Optimistic Separately, State Minister/Head of the Bappenas Armida Alisjahbana was optimistic Indonesia's economic growth in the fourth quarter of 2010 would increase from 5.8% recorded in the third quarter. "We hope the Q4 economic growth can be higher than the Q3 one. I hope the economy can grow by 6.1%," she said yesterday. Such a confidence, added Armida, was based on stronger consumptions, better exports, and higher investments. Moreover, the role of government spending would also surge in the last quarter. Deputy Minister of Agriculture Bayu Krisnamurthi added weather uncertainty was predicted to affect food prices. (14/wiw)

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