‘5.4PC GDP GROWTH TOO OP­TI­MISTIC’

BI deputy gov­er­nor urges na­tion to aim for higher credit rat­ings and says 5.1-5.2pc tar­get still achiev­able this year

New Straits Times - - Business -

JAKARTA

IN­DONE­SIA’S cen­tral bank said eco­nomic growth of 5.4 per cent this year is too op­ti­mistic and the na­tion should aspire for higher credit rat­ings to catch up with South­east Asian peers.

“In our view, the growth rate should be higher than last year,” said Bank In­done­sia Se­nior deputy gov­er­nor Mirza Adityaswara, here, on Fri­day.

“Maybe 5.4 per cent is still a bit too ag­gres­sive, but we think 5.1 to 5.2 per cent is still a pos­si­ble num­ber to achieve this year.”

While South­east Asia’s big­gest econ­omy is grad­u­ally re­cov­er­ing, it faces risks from a slow­down in China and weaker prices of coal and palm oil, the na­tion’s main com­mod­ity ex­ports.

Pres­i­dent Joko Wi­dodo has pledged to boost growth to seven per cent dur­ing his term in of­fice, but econ­o­mists sur­veyed by Bloomberg pre­dict ex­pan­sion of un­der 5.5 per cent un­til 2019.

His gov­ern­ment has made in­roads on some eco­nomic re­forms, help­ing it win an in­vest­ment-grade score from S&P Global Rat­ings this month. De­spite its eco­nomic size, smaller neigh­bours in­clud­ing the Philip­pines, Thai­land and Malaysia all en­joy higher rat­ings from S&P.

“We have to use the im­prove­ment in the credit rat­ing to chal­lenge our­selves to get fur­ther im­prove­ment,” said Adityaswara.

Keep­ing the cur­rent ac­count deficit un­der con­trol was key, which meant the na­tion needed to di­ver­sify into non-com­mod­ity ex­ports and push for stronger tourism, he said.

Global funds poured a record US$6 bil­lion (RM25.62 bil­lion) into ru­piah se­cu­ri­ties this year, help­ing to drive In­done­sia’s 10-year yield down by the most in Asia.

“Con­sid­er­ing that the global sit­u­a­tion is quite sta­ble, what we can ex­pect is funds from Ja­pan, and also funds from maybe Euro­pean and Amer­i­can pen­sion funds that are pur­posely not in In­done­sia yet to come,” said Adityaswara.

Bank In­done­sia has kept its bench­mark in­ter­est rate un­changed at 4.75 per cent for seven months, re­frain­ing from pro­vid­ing more stim­u­lus to the econ­omy af­ter six rate cuts last year. Bloomberg

AFP PIC

While In­done­sia is grad­u­ally re­cov­er­ing, South­east Asia’s big­gest econ­omy faces risks from a slow­down in China and weaker prices of coal and palm oil.

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