Growth may reach 5%, depends on bank loans

The central bank says economic growth may reach 5 percent next year if bank lending can accelerate, supporting the real sector.

"A 5 percent growth is the ceiling rate of Bank Indonesia's [BI] projection. It will depend on banks' response to BI rates. We expect lending growth will accelerate," BI senior deputy governor Darmin Nasution said Monday.

BI expects lending to accelerate following an agreement last week of 14 major local banks to cut deposit rates at once, thus providing room for banks to cut lending rates.

Lower lending rates will reduce borrowing costs, helping businesses to expand.