ank Indonesia (BI) expects the Indonesian economy to expand by 5.2 percent this year on the back of strong commodity prices and fiscal stimulus policies aimed at attracting investors.
The projected gross domestic product (GDP) growth is higher than last year’s 5.07 percent and in line with the central bank’s earlier projection of GDP growth between 5.1 and 5.5 percent, but lower than the 5.4 percent growth projection stated in the 2018 state budget.
During the first quarter of the year, the GDP expanded by 5.06 percent year-on-year (yoy), boosted by investment, while household spending disappointed with an increase of less than 5 percent yoy.
Newly appointed BI Governor Perry Warjiyo said strong commodity prices would give an economic boost to regions outside of Java Islands, such as Sumatra and Kalimantan, which rely heavily on the export of commodities.
“Good commodity prices will drive growth in areas outside of Java Island. Moreover, the exchange rate is favorable for exporters, so that is hoped to increase exports,” he told reporters in a media briefing in Jakarta on Friday.
Another positive factor was the fiscal stimulus, particularly from the government’s infrastructure spending, as well as positive trends seen in investments, Perry said.
However, he acknowledged that a growth rate beyond 5.3 percent would be hard to achieve, as imports exceeded exports, while household spending growth was still below 5 percent.
“Exports were good, but imports were growing faster. We project the current account deficit to widen to 2.5 percent of the GDP this year,” he said (bbn)
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