Indonesia's economy may continue growing next year

Indonesia's economy may continue growing next year

JAKARTA (JP): Indonesia's economy will likely grow at a higher rate next year but overheating will continue to haunt it, a noted economist said.

"Our economic growth will slightly surpass this year's growth of 7.5 percent, mainly because of the increase in investment," Hadi Susastro of the Center for Strategic and International Studies, told reporters here yesterday after attending a graduation ceremony of the Prasetiya Mulya School of Management.

He pointed out that a number of investments that had been approved by the government this year will be realized next year.

The investment increase will make next year's economy different from this year, which has been driven mainly by the increase in public consumption.

He said, however, that there are other analysts who view that the economic growth rate will likely slow down slightly, although its growth will still be above 7 percent. They contended that the slowdown will result from the decrease in public consumption next year.

"This year's growth is very much supported by domestic consumption, which has risen due to an increase in credits," he said, adding that next year will see a drop in money supply.

Despite the encouraging prediction, however, he warned that the rapid growth could be endangered by rising inflation.

Efforts, therefore, should be made, particularly in the macroeconomy, to keep the rapid growth on a safe path.

As the economy will be driven by investment and exports next year, it will be more easily managed if overheating hits the economy, rather than if it were caused by public consumption.

Minister of Finance Mar'ie Muhammad has also indicated that the government is currently working on new measures to help prevent the economy from overheating next year.(13)