Apr 8, 2006 Indonesian inflation to hit 14%
JAKARTA - Asian Development Bank (ADB) predicts that Indonesian inflation will reach 14% this year, far exceeding the government's target of 8%.
However, a sharp decline to 7.5% is expected in 2007, Country Director of ADB in Indonesia Edgar A Cua said.
ADB economist Amanah Abdulkadir predicted high prices of oil and weak rupiah toward the end of this year will keep the inflation high this year.
Amanah said the country's economy is expected to expand only by 5.4% this year lower than the government's target of 6.2% and in 2007, the growth rate is estimated to rise to 6%.
The success in achieving the target will depend much on the success in implementing the government's program in infrastructure development, she said.
Meanwhile, principal economist of ADB Ramesh Subramaniam said Indonesia needs foreign investment to boost its economic growth by 6%-7%.
Subramaniam pointed out in the next five years the country needs US$150 billion to build its infrastructure while, banks could provide only 20% and the government 13% of the fund requirement.