Inflation rate expected to hit 8.5% this year<\/p>\n
JAKARTA (JP): The Central Bureau of Statistics (BPS) expects
\nIndonesia's inflation rate to reach 8.5 percent this calender
\nyear and 8.9 percent next year.<\/p>\n
The agency attributed the high estimates to continued
\nincreases in demand for consumer products.<\/p>\n
A BPS economic forecast for 1996 and 1997, made available
\nyesterday, said the projected rates are not expected to affect
\nconfidence in the rupiah. Higher inflation is to come from
\nincreases in demand rather than slower growth on the supply side,
\nthe report said.<\/p>\n
The government had planned to keep the inflation rate at 5
\npercent per annum in the current five year development period,
\nending in 1999. The target has yet to be achieved.<\/p>\n
The inflation rate, for example, was recorded at 8.65 percent
\nin 1995, down slightly from 9.24 percent in the previous year. In
\nthe January to July period of this year, the inflation rate was
\nchecked at 4.98 percent, down from 6.41 percent during the same
\nperiod of last year.<\/p>\n
According to BPS, government policies to fight inflation
\nthrough fiscal and monetary measures have not been effective due
\nto growth in short-term foreign funds through domestic equity and
\nmoney markets.<\/p>\n
\"The increase in the inflow of foreign funds through the
\ncapital and money markets makes it difficult for the monetary
\nauthority to control the money supply,\" the bureau said.<\/p>\n
Investment decline<\/p>\n
It also reported an expected drop in the growth rate of
\nforeign investment approvals to 15 percent both in 1996 and 1997,
\nfrom 25 percent last year.<\/p>\n
The projected declines in the value of foreign investment
\napprovals were attributed to inconsistencies in the government's
\nmicroeconomic policies. BPS did not elaborate.<\/p>\n
Foreign investment approvals, according to the Investment
\nCoordinating Board (BKPM), declined in value by 2.7 percent to
\n$21 billion between January and July 15 this year from $27.2
\nbillion in the same period of last year. Meanwhile, the value of
\ndomestic investment approvals rose 127 percent to Rp 70.6
\ntrillion from Rp 31 trillion.<\/p>\n
In 1995, foreign investment approvals rose 68 percent to $39.9
\nbillion from $23.7 billion in 1994, while domestic investment
\napprovals increased 30 percent to Rp 69.9 trillion from Rp 53.3
\ntrillion.<\/p>\n
BPS said that slower foreign investment growth would result in
\na decline in the aggregate growth of gross domestic capital to
\n7.67 percent in 1996 and 7.91 percent in 1997, compared to 8.4
\npercent in 1995.<\/p>\n
It said that slower growth in foreign investment approvals
\nwould also slow domestic demand and the importation of consumer
\ngoods and services.<\/p>\n
The actual growth rate of imported goods and services is
\nexpected to decline to 12 percent next year from 24 percent last
\nyear, BPS said. (hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/inflation-rate-expected-to-hit-85-this-year-1447893297",
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