Indonesia to Reach 5.2 Percent Economic Growth: World Bank
23 March 2017 07:26 WIB
TEMPO.CO, Jakarta - The World Bank has corrected its view of Indonesia’s economic growth from 5.3 percent to 5.2 percent at the end of the year. The forecast exceeds the target set by the government at 5.1 percent.
World Bank Country Director for Indonesia Rodrigo Chaves views that low unemployment rate and current account deficit, as well as the lowest inflation rate, reflect Indonesia’s economic resilience amid global economic crisis. Indonesia’s economy has been strengthened by accommodative monetary policies, commodity prices and an increased in export volumes, as well as an increase in income and household consumption.
Chaves said that after a strong growth in 2016, Indonesia’s economic outlook for 2017 will be positive.
The World Bank foresees 4.3 percent increase in the inflation rate from that of 2016 at 3.5 percent due to electricity subsidies shift and new vehicle registration tariffs. It also predicts that government budget deficit will increase to 2.6 percent of the gross domestic product due to increase in capital expenditure.
Moreover, the World Banks sees that government policies on trade in services have been hampering productivity and competitiveness that led to a lower economic growth. Even more so since the Organisation for Economic Co-operation and Development (OECD) reported that Indonesia has the most barriers to trade in services.
Finance Minister Sri Mulyani expects household consumption contribution to growth to reach 5 percent this year. In addition, the government relies heavily on investment growth which is expected at 6 percent.
The government has issued a range of policies to boost economic growth. For example, it has disbursed massive infrastructure funds, issued economic policies to improve business and investment climate and revitalized several sectors.
Eko Listiyanto, an economist with the Institute for Development of Economics and Finance (Indef), said that the economic growth target will not be achieved if not helped by improved people’s purchasing power. More so because inflation rate has been steadily increasing after the government revised the prices. “Otherwise, the growth will only reach 5 percent,” he said.
Angelina Anjar Sawitri | Tongam Sinambela | Putri Adityowati
