News Room - Business/Economics

Posted on 23 Jul 2008

ADB: Indonesian economy growing by 6 pct this year

The Asian Development Bank (ADB) predicted that Indonesia`s economic growth in 2008 would reach 6 percent, and increase to 6.2 percent in 2009, so that is regarded successful in maintaining its economic growth momentum above 6 percent.

The ADB in its six-month study carried in the Asia Economic Monitor, said on Tuesday Indonesia`s economic growth rate has been slightly obstructed by its export growth slightly affected by a decline in demands from the global economy, but the preserved domestic consumption while the strong investment flow will maintain the growth rate, besides an encouragement from several facilities on the fiscal policy side.

The ADB has estimated that the inflation rate in Indonesia in 2008 may reach around 10.1 percent, and 7.8 percent in 2009, which means a slight better than Vietnam whose inflation rate reached 19.4 percent in 2008, and 10.2 percent in 2009.

"The push to the inflation is still caused by the high prices of oil and other world commodities, but unfortunately there were still no sign the prices will drop," the report said.

The ADB also predicted that capital would still be flooding Indonesia and other countries in East Asia in 2008 as the result of economic prospects and the interest margin with the United States. "Although the increasing pressure of the inflation may make the government to allow the rapid strengthening of the rupiah, the current balance surplus and capital balance will raise the foreign exchange reserves of the countries in the region," he said.

Globally, the ADB estimated that economic growth in China in 2008 will reach 9.9 percent, which is two percent slower than last year`s, and likewise, the Japanese economy has been predicted to grow by 1.5 percent in 2008, or slower than 2.9 percent in 2007. Meanwhile the American economy will grow by 1.5 percent this year, 6 percent faster than in 2007, and the economy in Europe will grow 1.8 percent in 2008, faster than the 1.4 percent in 2007.