ADB raises Indonesia '07-08 growth forecast
Tuesday, 18 September 2007
JAKARTA, Sept 17 (AFP): The Asian Development Bank (ADB) said today it had slightly upgraded its growth forecast for Indonesia for 2007-08 due to stronger than anticipated growth in private consumption and investment.
The ADB said it lifted its 2007 growth forecast to 6.2 per cent from 6.0 per cent previously and its 2008 forecast to 6.4 per cent from 6.3 per cent.
But the ADB's revised estimates were still lower than the government's own forecast of 6.3 per cent gross domestic product (GDP) growth for 2007 and 6.8 per cent growth for 2008.
Indonesia's economy, Southeast Asia's largest, expanded by 5.5 per cent last year.
It expanded 6.1 per cent in the first half of 2007, mainly driven by private consumption, a recovery in private investment and solid expansion in net exports.
"First-half private consumption and investment showed greater strength than expected, and this is likely to be maintained in the second half, leading to an upward revision in the full-year GDP growth forecast to 6.2 per cent," the multilateral agency said in its latest Asian Development Outlook 2007.
It said GDP growth is projected to edge higher in 2008, driven mainly by domestic demand.
The reductions in domestic interest rates since May 2006 and an improving investment climate are set to push investment growth next year, while a recovery in consumer confidence will lead to an acceleration in private consumption expenditure, it said.
Bank Indonesia has trimmed its benchmark interest rate by a cumulative 450 basis points since May last year to 8.25 per cent, but has refrained from cutting the rate at its last two meetings as inflation has picked up.
The ADB said it lifted its 2007 growth forecast to 6.2 per cent from 6.0 per cent previously and its 2008 forecast to 6.4 per cent from 6.3 per cent.
But the ADB's revised estimates were still lower than the government's own forecast of 6.3 per cent gross domestic product (GDP) growth for 2007 and 6.8 per cent growth for 2008.
Indonesia's economy, Southeast Asia's largest, expanded by 5.5 per cent last year.
It expanded 6.1 per cent in the first half of 2007, mainly driven by private consumption, a recovery in private investment and solid expansion in net exports.
"First-half private consumption and investment showed greater strength than expected, and this is likely to be maintained in the second half, leading to an upward revision in the full-year GDP growth forecast to 6.2 per cent," the multilateral agency said in its latest Asian Development Outlook 2007.
It said GDP growth is projected to edge higher in 2008, driven mainly by domestic demand.
The reductions in domestic interest rates since May 2006 and an improving investment climate are set to push investment growth next year, while a recovery in consumer confidence will lead to an acceleration in private consumption expenditure, it said.
Bank Indonesia has trimmed its benchmark interest rate by a cumulative 450 basis points since May last year to 8.25 per cent, but has refrained from cutting the rate at its last two meetings as inflation has picked up.