Indonesia growth forecast set at 6.3%

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Indonesia has set its growth forecast for the third quarter 2012 at 6.3 per cent, according to the latest economic development report by the government published July 19 and obtained by Inside Investor.

The report says that amidst the escalation of global economic uncertainties, the Indonesian economy is showing resilience, “but a limited effect” on the country’s performance was “unavoidable.”

As a result of weakening export performance, Indonesia’s economy in the third quarter 2012 is estimated to post lower growth of 6.3 per cent and is expected to arrive at 6.1–6.5 per cent and 6.3–6.7 per cent  in 2012 and 2013, respectively.

The economic growth is mainly supported by strong domestic demand, as private consumption and investment growth remain high. From the production side, all sectors are expected to chart favourable growth. The main driver to economic growth is expected to come from the transportation and communication, manufacturing, trade, and hotel and restaurant sectors.

Domestic and foreign-direct investment in the first quarter of 2012 was 71.2 trillion rupiahs ($7.5 billion), an increase of 32 per cent compared to the same period in 2011.

Inflation in the second quarter of 2012 remained subdued. CPI inflation in the same period was recorded at 4.53 per cent year-on-year while core inflation remained low at 4.15 per cent due to declining global commodity prices and improving inflation expectations. In addition, food prices picked up as a result of supply disruption.

Indonesia’s financial system stability remained solid. In the board of governors’ meeting of the central bank on July 12, 2012, it was decided to hold the interbank interest rate steady at 5.75 per cent.

The central bank said it remains vigilant on the global economic slowdown that will lead to weaker export performance amid strong imports, as domestic demand remains strong. In line with that condition, Bank Indonesia said it will continue to strengthen the management of the exchange rate of the rupiah.

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Reading Time: 2 minutes

Indonesia has set its growth forecast for the third quarter 2012 at 6.3 per cent, according to the latest economic development report by the government published July 19 and obtained by Inside Investor.

Reading Time: 2 minutes

Indonesia has set its growth forecast for the third quarter 2012 at 6.3 per cent, according to the latest economic development report by the government published July 19 and obtained by Inside Investor.

The report says that amidst the escalation of global economic uncertainties, the Indonesian economy is showing resilience, “but a limited effect” on the country’s performance was “unavoidable.”

As a result of weakening export performance, Indonesia’s economy in the third quarter 2012 is estimated to post lower growth of 6.3 per cent and is expected to arrive at 6.1–6.5 per cent and 6.3–6.7 per cent  in 2012 and 2013, respectively.

The economic growth is mainly supported by strong domestic demand, as private consumption and investment growth remain high. From the production side, all sectors are expected to chart favourable growth. The main driver to economic growth is expected to come from the transportation and communication, manufacturing, trade, and hotel and restaurant sectors.

Domestic and foreign-direct investment in the first quarter of 2012 was 71.2 trillion rupiahs ($7.5 billion), an increase of 32 per cent compared to the same period in 2011.

Inflation in the second quarter of 2012 remained subdued. CPI inflation in the same period was recorded at 4.53 per cent year-on-year while core inflation remained low at 4.15 per cent due to declining global commodity prices and improving inflation expectations. In addition, food prices picked up as a result of supply disruption.

Indonesia’s financial system stability remained solid. In the board of governors’ meeting of the central bank on July 12, 2012, it was decided to hold the interbank interest rate steady at 5.75 per cent.

The central bank said it remains vigilant on the global economic slowdown that will lead to weaker export performance amid strong imports, as domestic demand remains strong. In line with that condition, Bank Indonesia said it will continue to strengthen the management of the exchange rate of the rupiah.

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