Bank Indonesia Governor Agus Martowardojo expects the country’s economy to grow around 5.1 percent-5.2 percent in the second half of this year, up from 5.01 percent in the first half thanks to strong consumption, government spending and pro-growth monetary policy.
“Our economic fundamentals are in good condition,” Agus said at the House of Representatives on Monday (23/10).
Bank Indonesia, the central bank, kept its benchmark rate at 4.25 percent this month following cuts to the tune of 50 basis points in August and September to support sluggish lending and consumption.
Indonesia’s trade balance recorded a wider surplus — which cumulatively stood at $10.87 million in January-September this year, up from $6.41 million in the same period last year — and inflation was maintained within the central bank’s target of 3 percent-5 percent.
“We also see more investments, in buildings and also non-buildings […] and especially in purchases of capital goods in plantation and mining sectors,” Agus said.
The governor said exports from mining and plantation sectors are expected to increase on the back of improving economic conditions globally.
Economic growth in the second half of the year, he said, will be mainly propped up by the trade, hotel and restaurant, and manufacturing industries.
“Sales in the automotive and motorcycle industries have [shown] a lot of improvement. Several other industries [such as] trade, hotel and restaurant are also experiencing better sales,” he said.
According to data from the Indonesian Automotive Association (Gaikindo), automakers have sold a total of 715,291 cars as of August, up 3.6 percent compared to 690,300 during the same period in 2016.
The central bank expects economic growth in 2017 to remain within its projection of 5 percent-5.4 percent before accelerating to 5.1 percent-5.5 percent in 2018.
The World Bank in its latest report said it expects Indonesia’s GDP to increase by 5.1 percent this year and 5.3 percent next year.