Economy may expand by 5.5% in fourth quarter: Central Bank
Economy may expand by 5.5% in fourth quarter: Central Bank
Indonesia's economy is forecast to expand as much as 5.5 percent in the fourth quarter as lower interest rates boost consumer spending, the central bank said.
"The economic growth is still driven by domestic consumption," the central bank said in a faxed statement today. "Exports have started to increase though at a limited pace."
Indonesia is counting on consumer spending and exports to help its US$208 billion economy meet growth targets of 4.8 percent this year and 5.4 percent in 2005. Consumer spending, which accounts for 70 percent of the economy, soared after interest rates fell to a five-year low.
Exports rose 41 percent to $7.15 billion in September this year from a year earlier, helped by higher oil prices and increased shipments of commodities to China and India.
Foreign direct investment fell 11 percent in the first 10 months this year to $8.85 billion from $9.94 billion a year earlier, the Capital Investment Board said in a statement.
The rupiah is expected to strengthen with "a declining volatility" at a daily average of 9,099 against the U.S. dollar in October this year. The central bank has said that the rupiah is expected to strengthen through year-end on expectation that economic policies introduced by President-elect Susilo Bambang Yudhoyono will help boost economic growth. The rupiah traded at 9,065 as of 7.25 p.m. Jakarta time.
"The slide in the rupiah and other external factors remain the dominant factor of the inflation rate," Bank Indonesia.
Indonesia's central bank said yesterday that it lowered its full-year inflation forecast to 6 percent from 7 percent because it expects the rupiah will stabilize at 9,000 against the U.S. dollar by the end of the year.
Consumer prices rose 6.22 percent in October, its slowest since April, the Central Statistics Agency said early this month.
Going forward, Bank Indonesia plans to keep a "tight bias" in its monetary policies, it said in the statement, signaling that it will try to drain more funds from the financial system to strengthen the rupiah. -- Bloomberg