World Bank cuts Indonesia’s growth forecast

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OLYMPUS DIGITAL CAMERAThe World Bank has cut its economic forecast for Indonesia for 2013 and 2014, citing weaker commodity prices, tighter global liquidity and slowing domestic demand as the main drags on the economy.

In its latest Economic Quarterly report on Indonesia, launched in Jakarta on October 4, the Washington-based lender predicted Indonesia’s economy would expand by 5.6 per cent this year and 5.3 per cent next year. This forecast is down from previous estimates of 5.9 per cent in 2013 and 6.2 per cent in 2014.

“Indonesia’s economic growth is slowing, weighed down by the cumulative impact of the weakening in key commodity prices, which has been underway since 2011 and by tightening domestic and international financing conditions, and challenged by aspects of the policy environment,” the World Bank said in the report.

Slowing exports have been dragging Indonesia’s economy this year. Growth in the nation slowed in the second quarter of this year to 5.8 per cent year-on-year from 6 per cent in the first quarter.

Exports contributed about 25 per cent of Indonesia’s second quarter GDP, with consumer demand making up 55 per cent of GDP.

The rupiah has fallen by 20 per cent so far this year against the US dollar. These pressures, coupled with soaring inflation in the country following the government’s move to hike the price of subsidised fuel in May 2013, contributed to the central bank raising its key interest rate by a cumulative 150 basis points since June.

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Reading Time: 1 minute

The World Bank has cut its economic forecast for Indonesia for 2013 and 2014, citing weaker commodity prices, tighter global liquidity and slowing domestic demand as the main drags on the economy.

Reading Time: 1 minute

OLYMPUS DIGITAL CAMERAThe World Bank has cut its economic forecast for Indonesia for 2013 and 2014, citing weaker commodity prices, tighter global liquidity and slowing domestic demand as the main drags on the economy.

In its latest Economic Quarterly report on Indonesia, launched in Jakarta on October 4, the Washington-based lender predicted Indonesia’s economy would expand by 5.6 per cent this year and 5.3 per cent next year. This forecast is down from previous estimates of 5.9 per cent in 2013 and 6.2 per cent in 2014.

“Indonesia’s economic growth is slowing, weighed down by the cumulative impact of the weakening in key commodity prices, which has been underway since 2011 and by tightening domestic and international financing conditions, and challenged by aspects of the policy environment,” the World Bank said in the report.

Slowing exports have been dragging Indonesia’s economy this year. Growth in the nation slowed in the second quarter of this year to 5.8 per cent year-on-year from 6 per cent in the first quarter.

Exports contributed about 25 per cent of Indonesia’s second quarter GDP, with consumer demand making up 55 per cent of GDP.

The rupiah has fallen by 20 per cent so far this year against the US dollar. These pressures, coupled with soaring inflation in the country following the government’s move to hike the price of subsidised fuel in May 2013, contributed to the central bank raising its key interest rate by a cumulative 150 basis points since June.

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