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Indonesia’s economy poised to grow 5.2% this year: ADB
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Shipping activities underway at Tanjung Priok Port in Jakarta. (Kompas.com/-)
T
he Asian Development Bank (ADB) has maintained its growth projection for the Indonesian economy at 5.2 percent this year on the back of brighter consumption.
Private consumption is expected to pick up slightly due to moderate inflation, a relatively stable rupiah and an energy price cut in April. The announced increase in the personal income tax threshold and a 14-month salary for civil servants will further boost household spending, according to a statement circulated Monday by the Manila-based regional development bank.
However, several domestic and global downside risks remain. The ADB expects that revenue shortfall may be higher than projected, a reality that would constrain the government’s infrastructure development plans.
Government tax revenues in the first six months of the year totaled Rp 518.4 trillion (US$39.6 billion), lower than the Rp 536.1 trillion recorded in the same period last year. Revenue fell Rp17.7 trillion or 3.3 percent year-on-year in the first half of the year.
The ADB also weighed in on the continued weakness in credit growth, claiming that such weakness could limit recovery in private investments. The main external risks have been listed as weaker than expected global growth and higher global financial market volatility, the statement read.
Indonesia’s economy grew at a lower than expected rate, sitting at 4.92 percent in the first quarter of this year. The government has revised its growth target from 5.3 percent to 5.2 percent in the revised state budget approved in late June by the House of Representatives. (est)
