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Local and foreign analysts are upbeat that Indonesia will be
able to meet its economic growth target of 6.3 percent next year
despite an expected slowdown in world trade.
UBS Investment Bank Global Economics managing director Paul Donovan
said in Jakarta on Tuesday that Indonesia, as one of the world's major
commodities exporters, would benefit from the expected increase in the
international demand for commodities, which would continue to increase
despite the projected decline in overall trade.
"The damage caused by the slowing down of U.S. consumer spending will
be limited in Indonesia," he said.
Donovan said that global trade and services would likely decline next
year, partly as a result of slower growth in orders from the United
States, which is facing an economic slowdown.
He predicted that the slowdown in the U.S. economy would result in a
fall in U.S. domestic consumption growth to only about 2 percent next
year from about 4.5 percent this year. This, according to Donovan,
would result in a decline in the average growth of Asian countries to 7
percent from about 8 percent this year.
"For Indonesia, however, we are more positive next year on growth. We
are looking to growth of 6.3 percent next year," he said.
In the second quarter of this year, Indonesian economic growth reached
5.2 percent. The government has targeted 5.6 percent growth by the end
of this year. For next year, the government expects economic growth to
reach 6.3 percent.
Donovan said that an expected further surge in demand from China, the
second largest economy in the world, would be able offset weaker demand
in the U.S.
"China's economic growth next year is important to Indonesia because
its imports of raw materials will continue to increase," he said.
Separately, PermataBank commissioner Gunawan Geniusahardja said that
besides increasing Indonesian commodities exports, a further drop in
lending rates would also spur economic growth.
"The signs of improvement in Indonesia's economy have been evident
since the second quarter of this year, since the fall in Bank
Indonesia's key rate and lending rates," he said as quoted by Antara.
Bank Indonesia cut its key interest rate to 10.25 percent last week,
the sixth cut since May amid improvements in the country's economic
fundamentals, especially inflation. The central bank's key rate reached
as high as 12.75 percent in January.
Meanwhile, the lending rate has declined to about 16 percent from more
than 18 percent earlier this year, but analysts said it is still too
high to boost investment.
Indonesian Chamber of Commerce and Industry (Kadin) chairman Muhammad
Hidayat has said that an ideal lending rate would be about 12 percent.
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