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BI revises down 2017 growth projection
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Bank Indonesia governor Agus Martowardojo. (JP/Anton Hermansyah)
B
ank Indonesia (BI) has revised down its economic growth projection for 2017 to 5.4 percent from previously 5.5 percent, as it sees little support from the global economy.
Pointing to weakness in developed economies like the EU and Japan, BI Governor Agus Martowardojo said the consensus forecast for global economic growth next year was just 3 percent. The possibility of the US adopting protectionist measures under Donald Trump's administration would also exacerbate conditions, he said.
"The direct impact from US protectionism will not be big, as our exports to the US are just 11 percent of our total exports, but we might have an indirect impact through China," Agus said during a press conference at BI’s headquarters on Friday.
Indonesia exports predominantly raw materials and commodities to China, while China exports mostly finished goods to the US. Falling Chinese exports to the US may reduce Chinese demand for raw materials and commodities.
Meanwhile, the central bank predicted the banking industry's deposit and loan growth in 2017 to be 11 and 12 percent, respectively. The government might disburse funds from the tax amnesty in mid-2017, which would stimulate the domestic economy, BI said.
"The recovery of credit growth will be seen after the second quarter, it might stay weak until then," Agus said.
As for October, the banking industry saw loans grow by 7.4 percent year-on-year (yoy), while deposits increased by 6.5 percent yoy. For 2016, the central bank has already cut its double-digit targets to 9 percent for loan growth and 8 percent for deposit growth. (evi)
