TEMPO.CO, Jakarta - Bank Indonesia (BI) expects the economy to grow moderately in the range of 4.9 percent this year.

“Economic growth is expected to be in the middle range between 4.7 and 5.1 percent or in the range of 4.9 percent," BI Governor Agus Martowardojo said on Thursday, August 27.

He believes the domestic economy will grow better in the second half than the relatively slow first half.

According to Martowardojo, economic slowdown in the first half of this year, among others was caused by the budget not been disbursed quickly.

The central bank, he said, responded with consistent policy to keep inflation under control.

"We also continue to encourage the business community in order to take the precautionary principle with minimum hedging and minimum liquidity management. In particular we will continue to coordinate with the government," he said.

He also explained that the government is currently facing a major challenge with the world economy expected to grow only 3.3 percent, lower than the realization of economic growth in 2014 of 3.4 percent.

"Although there is improvement in developed countries like the US, but to note is China that has been growing above 10 percent in the last 20 years, was down to 7.4 percent, and in 2015 is projected at 6.8 percent. China is a huge economy, when they slow down naturally the impact will be felt, "he said.

Countries such as Brazil, Turkey, India and South Africa that are proud of their economic growth was not immune from pressures due to the weakening world economy and sentiment of the plan of raising interest rates by the Federal Reserve.

ANTARA