BI predicts economic growth next year at below 6.7 pct
Governor of Bank Indonesia (BI/the central bank) Darmin Nasution predicted Indonesia`s economic growth in 2012 at below the government`s target of 6.7 percent it set in the 2011 draft state budget.
The BI governor said that the slower economic growth which was predicted to be lower than the target was due to the slowing down of world`s economic performance as a result of the financial crisis in the United States and Europe.
"The slowing down of the world economy will have impact on the declining of commodity prices that will eventually drive down export and economic growth. With that conditions the economic growth in 2012 could be below the target," Darmin said during a meeting with the budgetary body of the House recently.
Darmin said that in the last two months uncertain economic developments could be seen clearly as a result of the debt and fiscal crisis in the United States.
"This conditions have the risk of driving down the world economy, affect the world trade and reduce the demand for Indonesia`s export commodities," he said.
However, the assumed figure of 6.7 percent in the state budget could be achieved if it is supported with a strong fiscal policy through high budget absorption so that higher economic growth could be boosted, he said.
"The target could be achieved if the absorption of the state budget could be accelerated," the BI governor said.
In the meantime, the local currency rupiah is also expected to continue to appreciate more than the 2012 budget prediction, which was set at Rp8,800 per US dollar.
He said that now the rupiah had up to August continued to appreciate with a stable volatility, yet it would appreciate further in 2012 as a result of the world economic turmoil.
"In 2012, the balance of payment will continue to be in surplus as a result of capital inflow into the country`s the real and portfolio investment sectors. This will boost limited appreciation of the rupiah, causing it to be more appreciative than the assumed exchange rate in the budget," Darmin said.