Jakarta (ANTARA News) - Strong domestic consumer demand is expected to drive Indonesia's economy this year and steer it away from the worst impact of a global economic slowdown, an official of the International Monetary Fund (IMF) said on Wednesday.
The economy has also become more resilient towards external financial instability, given its higher foreign exchange reserves and a declining external debt ratio to gross domestic product, he said.
"I think Indonesia's economy will resist the global economic slowdown due to strong domestic demand," Charles Collyns, deputy director at the research department of the IMF was quoted by Thomson Financial as telling a media briefing.
As of end-March, the central bank's foreign exchange reserves stood at $58.98 billion, compared to $47.22 billion at end-March 2007. Indonesia's foreign debt ratio currently stands at about 30 percent of GDP, down from 47 percent at end-2005.
IMF Indonesia country representative Stephen Schwartz said strong domestic demand is evident in brisk vehicle sales and rising consumer financing in the first quarter.
Nationwide vehicle sales rose 61 percent to 135,607 in the first quarter.
Collyns said the main area of concern at the moment is mounting inflationary pressures, although the problem is not exclusive to Indonesia but is also currently gripping the economies of Vietnam, Singapore, the Philippines and China.
Like many other emerging countries, Indonesia is caught in between the pressures of rising commodity prices and the slowdown in global economic growth, he said.
"It's up to the government to find the right balance of policies to contain inflationary pressures while at the same time keeping economic growth at a reasonable level," Collyns said.
Schwartz said the IMF is maintaining its growth forecast for Indonesia's economy at 6.1 percent for 2008.
This compares with the government's projection of 6.4 percent growth in GDP this year. (*)