"Despite the depressing global environment, the Indonesian economy is projected to continue to grow well this year and next year," head of the ADB representative office in Indonesia Winfried Wicklein told reporters at a news conference publishing Asian Development Outlook here on Wednesday.
Wicklein said the country's economic growth is propped up by inflation remaining under control thanks to properly managed fiscal position and a number of effective polices to keep stability.
He said Indonesia has continued to adopt prudent fiscal policy keeping budget deficit relatively low and government's debt ratio at a safe level of around 30 percent of the country's Gross Domestic Product (GDP).
"Indonesia needs to carry on with its mid and long term policies to create sustainable economic growth for the benefit of its people," he said.
Realization of the policies would need large investment and acceleration of main infrastructure development, improvement of education and skills and continued economic reform, he added.
The ADB report underlined the importance of an effective policy to create balance between economic growth and stability to cope with global uncertainties as a result of international trade tension and US tight monetary policy.
ADB predicted that Indonesia`s economy would grow 5.2 percent in 2018 and 5.3 percent in 2019.
It said household consumption is predicted to grow steadily on an increase in income driven by growing availability of jobs and public spending prompting consumption.
The household consumption is stronger with price stability with inflation estimated at 3.4 percent in 2018 and 3.5 percent in 2019.
Household economic growth will remain strong contributing to the economic performance although in short term exports would slow down and monetary policy has to be used more to mitigate external pressure and to keep stability.
In addition , investments by the private sector would grow to follow improvement in business climate thanks partly to improvement of infrastructure facilities, logistics and simplification of regulations through integrated service systems, the report said.
The government spending for infrastructure development is also expected to continue to be significant in 2018 and 2019 with a number of big projects scheduled to be completed soon, it said.
ADB's estimate puts the country's current account deficits in 2018 and 2019 at 2.6 percent of its GDP propped up by strong investment and economic growth.
On Monday Finance Minister Sri Mulyani said the government will keep the momentum of economic growth in the second half of 2018 to follow the global change in capital flows.
"We will continue to focus on maintaining the momentum of growth in the second half of 2018 amid the present global dynamics," the Minister said addressing a ceremony on Indonesia Economic Outlook Forum here .
She cited the interest rate has been raised, and investment has been boosted through fiscal policy.
"We have adopted the policy not only to maintain the momentum but also to reduce our vulnerability," she said, adding the policy is to help ensure that the economic growth target of 5.3 percent could be brought to reality in 2019.
The economic growth drivers expected in 2019 include consumption growth of 5.1 percent, investment growth of 7 percent, export growth of 6.3 percent and import growth of 7.1 percent.
The manufacturing sector will be given special addressing that it could grow more than 5 percent in 2019, she said.
Reporting by Satyagraha
Editing by A Saragih, Fardah
Reporter: Antara
Editor: Sri Haryati
Copyright © ANTARA 2018
