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Indonesia's economy is expected to wrap up the year on track
in line with the government's forecasts, despite risks to inflation and
growth from the recent rise in global oil prices, the latest market
confidence survey from the central bank shows.
Prospects for next year, however, may be no better than this year if
the risks stir up real trouble for the economy ahead.
For the remaining three months of this year, close to 75 percent of the
survey's respondents saw Indonesia's economy as still being able to
expand by between 6.1 and 7 percent this year.
Inflation for this year was expected to be in a similar range, while
the rupiah should hover between Rp 9,000 and 9,250 to the U.S. dollar.
Bank Indonesia's (BI) quarterly survey questioned a total of 100
economists, market analysts and academics from 13 major cities around
the country.
The government is targeting growth of 6.3 percent for 2007 --improving
to 6.8 percent next year -- on an inflation rate easing from 6.5
percent this year to 6 percent in 2008.
Apart from growth still being based mainly on consumption, a majority
of the respondents -- nearly 80 percent -- said that this year had been
more favorable for investment and exports.
Exports are expected to grow more strongly at between 15.1 and 22.5
percent, leading to a current account surplus of between 1.5 and 3
percent of gross domestic product.
Looking ahead, however, a possible "slowdown in the global economy" and
"still high global interest rates" could prove to be stumbling blocks
for the economy, along with a "continued lack of stimulus for growth
from government fiscal policies." Other "classic problems" included
"inconsistencies in government policies and regulations", which were
likely to put off investors.
Economists have warned of a possible slowdown in the world economy next
year due to the effects of the recent U.S. subprime mortgage market
turmoil and, now, rapidly increasing global oil prices.
BI has warned that a sustained surge in the prices of oil and other
commodities could fuel higher inflation from imports in the long run.
All this could, in turn, spell bad news for Indonesia's economy, with
lower consumer demand translating into less investment.
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