TEMPO.CO, Jakarta - The Asian Development Bank (ADB) predicted that the Indonesian economy would grow by 5.1 percent this year and 5.3 percent in 2018. The ADB also projected that asset investments and exports would remain the driving force of the economic growth.
Winfred Wicklein, ADB country director in Indonesia, said that the Indonesian economy would remain solid despite the global uncertainty this year. “With more allocations for public infrastructure projects and a better private investment climate, the economic expansion will likely to continue until next year,” Wicklein said at The Plaza Office Tower in Jakarta today, Sept. 26.
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ADB country economist Emma Allen said that consumption is in a solid state despite electricity price hike due to subsidy cuts. She predicted that the inflation rate would stand at 4 percent in 2017 and 3.7 percent in 2018.
However, Allen said that the trade prospect in Indonesia is still unpredictable as Indonesia’s partner countries have different economic recovery capabilities and economic growth. She pointed out declining commodity prices resulting in import slowdown in the second semester 2017.
ADB also predicted that the current account deficit would stand at 1.7 percent of the Gross Domestic Product this year. “The increasing current account deficit is related to higher imports and exports for several large-scale public investment projects,” Allen explained.
According to Allen, the risk of the projects will depend on the government’s efforts to mobilize tax revenues, global commodity prices, and developed countries’ policies. She suggested that Indonesia needs to maintain a flexible exchange rate, open trade and capital flow, and carry out the structural reform.
VINDRY FLORENTIN
