Economic growth in Indonesia face a new equilibrium

Economic growth in Indonesia face a new equilibrium


Standard Chartered Bank economist Eric Sugandi said Indonesia's economy will reach a new and growing ekulibirum point in the range of 5.5 percent - 6 , 0 percent per year , after the government address the issue of focus in the current account deficit .

" The economy could grow six percent , but the risk is the current account deficit will swell again , so the government's policy of deliberately braked economic growth , " he said in Jakarta on Wednesday .

Eric said fiscal and monetary policy to overcome the current account deficit in the short term , but the government needs to undertake structural reform more effective in maintaining the economic fundamentals .

" Structural Settling can be done through the development of the manufacturing industry , so ideally there is reform in the fields of industry , as exports are expected to weaken due to improved commodity prices , " he said .

According to him , the issue of current account deficit will be a major problem facing Indonesia up to three or five years , unless the industrial structural reforms take place faster than expected .

In addition to these problems , Indonesia is also facing challenges related to the weakening of the rupiah against the U.S. dollar , as well as the possibility of higher inflation and interest rates until the end of 2014 , although the economy faced a recovery .

" Average dollars by the end of Rp10.900 per U.S. dollar , the inflation rate assuming no increase in fuel prices , five per cent , but if there is rise in prices , inflation from 7.5 to 8.0 per cent and eight per cent can BI Rate year this , "said Eric .

Previously , the ratio of current account balance to nominal GDP deteriorated from a surplus of 0.2 percent in 2011 , to a deficit of 2.8 percent in 2012 and 3.3 percent in early 2013 , due to rising oil and fuel imports .

However , the government has issued a package of economic policies since mid-2013 , a tightening of fiscal and monetary policies , to reduce the current account deficit and make the exchange rate has strengthened .

More packages that aim to reduce imports and encourage exports, but beneficial to the process of stabilization of the national economy in 2014 is not expected to grow much higher than the estimated 5.8 percent - 6 , 0 percent .