BI Cuts Economic Growth Forecast for 2012

The central bank cut its economic growth forecast for the country next year to reflect a global slowdown and a decline in demand from advanced economies for Indonesian exports.

Halim Alamsyah, a deputy governor at Bank Indonesia, announced on Wednesday that the growth forecast for next year had been lowered from 6.7 percent to 6.3 percent.

“But there is a chance to grow at more than 6.3 percent because next year’s outlook will not be as bad as it was in 2008,’’ he said, referring to the 2008 global financial crisis triggered by the Lehman Brothers collapse.

Three years ago, Indonesia’s was the only economy in the region that managed to grow. It expanded 4.6 percent in 2008, while Thailand, Malaysia and Singapore saw contractions.

“Indonesian banks remain solid, and the government is more prepared with fiscal stimulus,’’ Halim said.

Europe’s debt crisis and a slowdown in the United States are sapping export demand in two of Indonesia’s major overseas markets.

“The recent forecast by Bank Indonesia is understandable,’’ an economist at a private bank in Jakarta said. “Bear in mind that Indonesia’s economy is a consumer-driven economy.”

The Paris-based Organization for Economic Cooperation was more bullish on Indonesia. The OECD, a policy forum for 34 advanced economies, said Southeast Asia would see robust economic growth over the next five years, led by Indonesia, as the region’s increasing reliance on domestic demand buffers it from global economic volatility.

Indonesia’s economy and those of neighboring nations in the region will grow an average of 5.6 percent from 2012 to 2016, the OECD said.

Halim said Indonesia’s inflation was forecast at 4.7 percent this year and 4.9 percent next year, which “would still be in line with Bank Indonesia’s target range.”

Inflation in Indonesia is forecast to slow to an 18-month low to 4.2 percent in November, according to a median estimate of economists surveyed by the Jakarta Globe.

The consumer price index, a measure of inflation, gained 4.4 percent in October this year. Data will be released today.


This to follow yesterday’s post about Indonesia’s growth being revised down. What’s your take on this? How do you think Indonesia’s performance compared to other South-east Asia countries and among the other emerging markets next year?




~ by extendasia on December 1, 2011.

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