"Indonesian economy growth in 2016 is projected to remain high, in a range of 5 percent to 5.4 percent year-on-year (yoy), slightly lower than the previous estimate of 5.2 percent to 5.6 percent," BI governor Agus Martowardojo told a press conference following the board of governors’ monthly meeting in Jakarta on Thursday.

Agus said the board of governors saw that the global economy moved at a slower pace than expected, not only as a result of sluggish economic activity in developed countries but also in emerging economies.

"The weaker global economic growth will definitely impact our exports and the domestic economy," he went on.

Given those conditions, the central bank would keep an eye on planned efforts to shore up the economy.

"For example, if the tax amnesty bill is passed, it will help jack up government revenue, as the repatriated funds could be used in productive sectors that will in turn boost the economy,” he said.

Meanwhile, BI deputy governor Perry Warjiyo said the government was planning more stimulus measures to boost the economy.

Perry said fiscal incentives launched by the government had improved investment, particularly in the construction sector, which grew by 7.7 percent yoy in the first quarter of the year.

Unfortunately, Indonesia's overall economy only grew by 4.9 percent yoy in the first quarter, as compared to 5.04 percent in the previous quarter.

"The fiscal stimulus was not effective in boosting private investment and business sentiment. The demand side also remains sluggish," he said.

Private consumption, weighing in at more than 58 percent of the gross domestic product (GDP) value in the period, expanded 4.94 percent. Investment expanded by 4.24 percent, while government spending grew by only 2.93 percent yoy versus 7.31 percent recorded in the previous quarter. 

However, this year's beginning was better than last year’s when the economy grew by 4.73 percent yoy, according to data from the Central Statistic Agency (BPS).

Meanwhile, BI senior deputy governor Mirza Adityaswara expects the pace to pick in the coming quarters.

Southeast Asia’s largest economy is expected to move faster in the second and third quarter thanks to holiday celebrations and higher government spending. 

The first-quarter figure is well below analysts’ and the government’s projection. BI expects to see the economy expand by 5.1 percent this quarter, while analysts project growth of between 5 percent and 5.2 percent. (dmr)

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