TEMPO.CO, Jakarta - Bank Indonesia (BI) says that the economy has improved in the third quarter of 2017 and some sectors have recovered. BI Deputy Governor Dody Budi Waluyo said that improvement is seen in domestic demand, particularly household consumption. “It’s apparent in improved retail and durable goods sales,” he said last week.

The central bank predicts that construction investment will grow in line with government spending. Non-construction investment, particularly commodity export-based industries, is expected to improve as global commodity prices remain high.

Dody said that improvement is also notable in trade, hotel and restaurant sectors, albeit remain sluggish. “Processing industry is also expected to improve, particularly in sectors related to exports, such as haulers and chemicals and pharmaceuticals,” he said.

Dody said that economic growth will improve as government spending increased. Other supporting factors include more relaxed Bank Indonesia monetary policy. As such, BI predicts around 5.0-5.4 percent economic growth this year. The figure is expected to increase to 5.1-5.5 percent in 2018.

On Standard & Poor's downgrade of China's debt rating from AA- to A+, Dody said that China’s economy will continue to grow underpinned by strong consumption and better credit distribution.

China’s high economic growth will have a positive impact on Indonesia, particularly in terms of commodity exports. “We are quite confident that coal and copper prices will be pretty high due to China,” Dody said.

VINDRY FLORENTIN