Thu, 26 Aug 2010


By Bloomberg News
Aug. 26 (Bloomberg) -- Indonesia’s economy may grow 6 percent this year and will probably accelerate in 2011, Trade Minister Mari Pangestu said.

The pace of expansion in the third and fourth quarters should “continue to pick up” in part because disbursement from the government’s budget “is normally much higher in the second half,” Pangestu said.

Indonesia is also seeing “continued robust consumer demand as well as investment picking up,” the trade minister said in an interview today at a conference in the central Vietnamese city of Danang.

Exports may grow by as much as 14 percent in 2010, Pangestu said. Indonesia’s shipments rose 31 percent in June from a year earlier, after gaining 36 percent in May.

“Commodity prices will be higher in the second half,” Pangestu said, citing rubber, palm oil and coal. “Non- commodities are also looking quite good,” she said, citing garments and footwear.

Expectations of a stronger Chinese currency have caused some production to shift to Indonesia, boosting footwear and garment shipments from the Southeast Asian nation, Pangestu said.

“It’s coming off a lot of relocation from China,” she said. “It’s a couple of factors: it’s the yuan, it’s the increased wage cost and stricter labor regulations and all the labor issues that China’s been facing.”

--Jason Folkmanis in Danang, with assistance from Diep Ngoc Pham in Danang. Editors: Sunil Jagtiani, Stephanie Phang