RI expected to maintain high growth<\/p>\n
JAKARTA (JP): Indonesia will probably maintain its high
\neconomic growth rate next year despite the growth of its current
\naccount deficit, a senior minister has forecast.<\/p>\n
State Minister for National Development Planning Ginandjar
\nKartasasmita told a seminar here on Tuesday that the economic
\ngrowth rate will remain high next year, possibly above the 7.1
\npercent level set in the government's current sixth Five Year
\nDevelopment Plan (Repelita VI) period.<\/p>\n
"And it will not differ very much from the growth in 1994 and
\n1995," Ginandjar said. He added that this year's growth rate is
\nexpected to exceed last year's level of 7.34 percent.<\/p>\n
Domestic consumption and investment will remain the main
\nengines for next year's economic growth, Ginandjar noted.<\/p>\n
However, he said, the growth of domestic consumption and
\ninvestment in 1996 will probably remain below this year's level
\nas a result of the tightening of bank credits and the declining
\ncompetitiveness of the country's exports.<\/p>\n
In addition to the growth rate, Ginandjar also forecasted that
\nnext year's inflation rate will possibly decline a little bit
\nfrom this year's level of about 8.5 percent.<\/p>\n
"If we look at the trend during the last three years, it shows
\nthat the inflation rate tends to decline though slowly,"
\nGinandjar said.<\/p>\n
He suggested that the National Logistics Agency work harder to
\ncontrol the increases of food prices, which have contributed
\nsignificantly to the country's inflation rate.<\/p>\n
Last year, for instance, food prices increased by 14 percent
\nand this year by 11.6 percent.<\/p>\n
Although the inflation rate is projected to decline in 1996,
\nthe current account deficit is projected to expand further next
\nyear as a result of strong pressures from rising imports.<\/p>\n
During the January-August period of this year, exports grew by
\n18.4 percent, as compared with 15 percent during the same period
\nof last year, while imports grew much more, by 28.9 percent.<\/p>\n
Ginandjar noted that this year's high growth of imports was
\nfueled, among others, by increasing domestic consumption as well
\nas investment activities.<\/p>\n
Current account<\/p>\n
"Barring some drastic changes in our export and import scheme,
\nit is unavoidable that our current account deficit will worsen
\nnext year," he said.<\/p>\n
A number of experts have voiced similar concern. The Econit
\nAdvisory Group, for instance, forecasts that this year's deficit
\nwill probably shoot up to US$6.4 billion, as compared with US$3.1
\nbillion last year.<\/p>\n
Ginandjar shared with other economic forecasts that next
\nyear's current account deficit will likely reach an alarming
\npoint of over three percent of the country's gross domestic
\nproducts (GDP). Indonesia's current GDP stands at some US$165
\nbillion.<\/p>\n
Next year's current account deficit, however, will be still
\nmanageable as it will be covered by the increasing inflow of
\nforeign capital through direct investment, portfolio investment
\nand private loans, Ginandjar added.<\/p>\n
Ginandjar, also chair of the National Development Planning
\nBoard, noted that the large current account deficit will serve as
\none of the indications toward another economic overheating.<\/p>\n
"Actually an economic overheating is not a problem for this
\nyear only, but it has been a chronic problem," Ginandjar told the
\nyear-end seminar, organized by the ruling Golkar party at its
\nheadquarters here.<\/p>\n
Other speakers at Tuesday's seminar included Coordinating
\nMinister for Production and Distribution Hartarto, Minister of
\nCooperatives and Small Enterprises Subiakto Tjakrawerdaya and
\nChairman of the Indonesian Chamber of Commerce and Industry
\nAburizal Bakrie. (rid)<\/p>",
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