Indonesia’s economy may expand from an estimated 5.3 percent to 5.5 percent in quarter one this year, supported by stronger investment and exports, Finance Minister Sri Mulyani Indrawati said.
There is even a possibility that growth may expand above this estimate, she said Monday at the Directorate General of Taxation.
“We may see from January to the second week of March that the gross domestic product [GDP growth] will be above 5 percent, between 5.3 and 5.5 percent,” she said. “Investment has begun to recover, and exports have become positive. Consumption remains strong.”
Asked whether the GDP could expand above 5.5 percent, Mulyani said: “It’s very possible.”
She said central banks have maintained interest rates globally to spur growth, despite showing
signs of exiting from anti-recession measures in the second half.
“But now their position remains,” she said.
Low interest rates will ease borrowing costs needed for businesses to expand, accelerating growth.
Bank Indonesia (BI) has kept its benchmark interest rate at 6.5 percent for the seventh straight month.
The central bank also planned to stop issuing one-month notes to encourage banks to increase their lending.
Last year the economy grew by 4.5 percent, after accelerating by 5.4 percent in the last quarter, according to the Central Statistics Agency (BPS).
Exports of non-oil-and-gas products in January rose 47.6 percent from a year earlier, according
to the BPS. The figure increased from 44.55 percent booked in December.
Household consumption, which usually drives 60 percent of GDP growth, is likely to remain strong if inflation does not spike, BPS Head Rusman Heriawan said Monday.
The government has said there will be no adjustment to the price of subsidized fuels this year, although the state budget may be burdened by rising global oil prices.
But there will be an adjustment to electricity tariffs in the second half this year, although the government will try to protect low-income households by focusing the increase on consumers with heavy electricity usage.
Mulyani’s growth prediction affirms earlier estimates made by BI and the BPS.
Rusman said Monday Indonesia’s economy may expand by more than 5 percent in the first three months of this year as exports and investments grow.
The central bank said last week that it estimated the economy would expand 5.7 percent in the first three months this year, up from the initial projection of 4.8 percent. It estimates the full-year growth will reach a range between 5.5 and 6 percent, and further accelerate to between 6 and 6.5 percent in 2011.
Analysts have said Indonesia’s economy may expand close to 6 percent this year on the back of stronger exports and investment. The government aims to achieve a 7 percent growth rate by 2014, the last year of President Susilo Bambang Yudhoyono’s administration.
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