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ndonesia is forecast to enjoy a constructive year in 2015 as a result of fuel-price reductions and falling inflation, which are expected to persuade the central bank to cut its policy interest rate and thus trigger growth, according to economists.

Glenn Maguire, ANZ chief economist for South Asia, ASEAN and Pacific, said 2015 would be a constructive year even though his office set the country'€™s economic growth projection below the maximum growth estimate set by the government and Bank Indonesia (BI), which is 5.8 percent.

'€œWe'€™re a little bit below Bank Indonesia'€™s estimate. We'€™re looking at 5.4 percent growth this year, but we'€™re expecting it to strengthen to near 6 percent next year. About 5.9 percent,'€ he told The Jakarta Post during a recent interview.

The Australian bank bases its estimate on the government'€™s plan to carry out multi-year infrastructure and public-works projects. It sees 2015 as the year when the building blocks fall into place for a sustained multiyear expansion of the Indonesian economy.

Maguire, however, said it would probably take between three and four years to actually see government spending across the economy.

'€œWhen you cut fuel subsidies, you realize the savings straight away. It'€™s instantaneous, so the budget is going to improve. But there'€™s a lag between making fiscal savings and actually spending them. This is perhaps one of the areas where the Indonesian economy is being misread by the consensus,'€ he said.

Daniel Wilson, ANZ economist for ASEAN and Pacific, wrote in a research note that Indonesia'€™s current account, along with inflation, would be the prime beneficiary of the recent policy decisions and the fall in oil prices.

'€œWe expect the current account deficit to benefit from a halving of the near US$12 billion 2014 oil and gas trade deficit,'€ he said, adding that the country'€™s fiscal deficit should narrow with the subsidy dividend outweighing the reallocation to capital expenditure.

The government, as previously reported, claims that it will be able to save up to Rp 200 trillion ($16.07 billion) in the state budget from the cut in fuel subsidies. It plans to use the funds to finance various projects, especially to develop infrastructure and the maritime and agriculture sectors.

It has also proposed a higher budget allocation in the revised 2015 state budget draft for several ministries, including an additional Rp 11.93 trillion for the Transportation Ministry to work on sea transportation infrastructure.

In terms of the current account deficit, the government hopes to see it reach 3 percent of GDP this year, a target that ANZ considers to be feasible.

Meanwhile, ANZ is predicting a significant decline in inflation this year, according to Maguire.

'€œThe extent of disinflation in Indonesia is going to be quite sharp. We'€™re expecting inflation to slow from 8.6 percent as of the end of last year to below 1.5 percent in the third quarter. So the yearly average will be below 4 percent,'€ he said.

The ANZ projection is in line with BI as the central bank is forecasting 4 percent '€” plus or minus 1 percent '€” in full-year inflation. BI deputy governor Perry Warjiyo earlier said that things seemed to be proceeding as estimated so far, as shown by its latest survey in the second week of January.