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RI's growth to improve as public investment increases: ADB
(Courtesy of adb
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(Courtesy of adb.org) (Courtesy of adb.org)
(Courtesy of adb.org)
Indonesia's economic growth is expected to recover next year, supported by rising public investment and continued economic reforms, says a new Asian Development Bank (ADB) report released on Tuesday.
In its update of its flagship annual economic publication, the Asian Development Outlook 2015, the ADB forecasts that Indonesia's gross domestic product (GDP) will grow by 5.4 percent in 2016, trimmed from the 6.0 percent prediction made in March but still more than the 4.9 percent growth expected this year. In March, the ADB forecast 5.5 percent growth for 2015.
'The delayed economic recovery is primarily due to weaker-than-anticipated external demands and financial market volatility,' ADB country director for Indonesia, Steven Tabor, said on Tuesday.
'The impact of a greater emphasis on deregulation, stronger infrastructure investment and export recovery triggered in part by devaluation are likely to spur economic expansion in the coming year.'
The ADB's 2015 outlook revealed that a key driver of the expected growth was stronger public spending, which has been delayed largely by slow fund disbursement.
'The government has taken measures to improve budget execution, which include efforts to simplify land acquisition procedures and advancing the tendering process for the procurement of most public projects under the 2016 budget to expedite implementation,' it says.
The report further says that policy reforms ' including a new one-stop service for investment licensing and increased efforts to encourage private investment in selected infrastructure projects through public-private partnerships ' are expected to stimulate private investment.
The report was referring to the government's unveiling of a package to revive investment earlier this month. The package was aimed at simplifying or removing regulations that hinder business, expanding tax incentives, accelerating strategic projects and allowing foreign ownership of high-end properties.
The ADB 2015 outlook further says that Indonesia's household consumption is expected to remain fairly robust. 'A pay rise for civil servants and tax breaks for low-income earners will foster consumer spending. Weakened consumer confidence earlier this year ' due to cuts to fuel subsidies and a depreciation of the currency ' has since stabilized,' it says. Another positive factor is the expected easing of inflation towards the end of the year.
'One risk to this growth prediction comes from global financial market turbulence, but the country's resilience under market volatility has improved, partly owing to its more flexible exchange rate and market-driven adjustments to bond yields,' ADB deputy country director for Indonesia Edimon Ginting said. (ebf)(++++)
