World Bank slashes Indonesia growth outlook
The World Bank on July 2 downgraded its GDP growth forecast for Indonesia in 2013 to 5.9 per cent from 6.2 per cent. It also predicted that inflation will hike to 7.2 per cent after the government raised fuel prices in June, far higher than the government’s 2013 target range of 3.5 to 5.5 per cent.
The bank said that is sees cooling domestic demand and slowing commodity exports. The Indonesian central bank also just raised its interest benchmark rate, raising concerns that slower loan growth could hurt banks.
Easing investment growth and declining exports are adding to the challenge. The persistent trade deficit contributed to a 3 per cent drop in the rupiah so far in 2013.
Indonesia, Southeast Asia’s largest economy, is a major exporter of key commodities such as palm oil, rubber, coal and tin. But unlike many of its Asian neighbours, the Indonesian economy is primarily domestically focused, with household consumption accounting for more than half of its gross domestic product.
However, increased government spending ahead of the 2014 elections could provide a boost, economists assume.
The World Bank on July 2 downgraded its GDP growth forecast for Indonesia in 2013 to 5.9 per cent from 6.2 per cent. It also predicted that inflation will hike to 7.2 per cent after the government raised fuel prices in June, far higher than the government’s 2013 target range of 3.5 to 5.5 per cent. The bank said that is sees cooling domestic demand and slowing commodity exports. The Indonesian central bank also just raised its interest benchmark rate, raising concerns that slower loan growth could hurt banks. Easing investment growth and declining exports are adding to the challenge....
The World Bank on July 2 downgraded its GDP growth forecast for Indonesia in 2013 to 5.9 per cent from 6.2 per cent. It also predicted that inflation will hike to 7.2 per cent after the government raised fuel prices in June, far higher than the government’s 2013 target range of 3.5 to 5.5 per cent.
The bank said that is sees cooling domestic demand and slowing commodity exports. The Indonesian central bank also just raised its interest benchmark rate, raising concerns that slower loan growth could hurt banks.
Easing investment growth and declining exports are adding to the challenge. The persistent trade deficit contributed to a 3 per cent drop in the rupiah so far in 2013.
Indonesia, Southeast Asia’s largest economy, is a major exporter of key commodities such as palm oil, rubber, coal and tin. But unlike many of its Asian neighbours, the Indonesian economy is primarily domestically focused, with household consumption accounting for more than half of its gross domestic product.
However, increased government spending ahead of the 2014 elections could provide a boost, economists assume.
