News Room - Business/Economics

Posted on 30 Apr 2010

Indonesia minister sees higher GDP growth in 2011

Indonesia expects gross domestic product to grow by 6.3 per cent for full year 2011, higher than 2010’s forecast of 5.7 per cent, Finance Minister Mulyani Indrawati said today.

 

In a speech to a planning seminar, Indrawati also said inflation for 2011 was expected to be around five per cent and investment expected to grow by 11 per cent, higher than 2010’s forecasts of 5.7 and 8 per cent respectively.

 

“Growth will still be dominated by domestic demand,” she said, adding that consumption was expected to grow by more than five per cent next year.

 

Southeast Asia’s biggest economy expanded 4.5 per cent last year, making it one of the only Asian countries to post positive growth in a year dominated by the global financial crisis, thanks to steady domestic demand and a lower dependence on exports.

 

Indrawati said while inflation was forecast at five per cent, “it will not be an easy job to maintain due to the expectation of a rise in commodities prices”.

 

Indonesia’s annual inflation has been contained below 3.5 per cent so far this year, allowing the central bank to keep interest rates at a record low of 6.5 per cent for eight consecutive months.

 

But most analysts expect prices to pick as commodity and energy prices rise, pressing the central bank to raise interest rates by the end of the third quarter.

 

Indrawati also said the government would plan 2011’s budget deficit at 1.7 per cent of GDP, lower than proposed 2010 budget deficit of 2.1 per cent.

 

“This will make Indonesia’s debt to GDP ratio decrease below 27 per cent,” she added.