Indonesia`s economy predicted to grow stronger in 2019

Indonesia`s economy predicted to grow stronger in 2019

Bank Indonesia governor Perry Warjiyo waves his hands to newsmen after giving a press conference on the result of the Board of Governors' meeting in Jakarta on Thursday (15/11/2018). ANTARA FOTO/Muhammad Adimaja/pras.

Jakarta  (ANTARA News) - Bank Indonesia predicted the country`s economy would grow stronger in 2019 than this year`s estimated growth of 5.1 percent.

Governor of the Central Bank Perry Warjiyo said the instrument of benchmark interest in 2019 would be used to maintain economic stability with parameters of exchange rate and inflation.

Perry dismissed suggestion that the Central Bank has slowed down the economic growth by raising its benchmark interest rate.

In six months from May to November this year, the Central Bank raised the its benchmark interest rate, "7Day Reverse Repo Rate" by 175 basis points to 6 percent at present.

He said there are a number of policies that could drive the economic growth - first by increasing alternative instruments to finance economic development; second, maintaining banking liquidity to encourage banks to continue its funding function; third, relaxation of macro-prudential policy and fourth, digitalization policy in payment system to increase consumption and the public income.

He said the economy could still grow 5.2 percent (yoy) in 2019.

"The economic growth range of 5-5.4 percent with middle point at 5.2 percent . But it could be 5.3 percent and 5.4 percent," he said.

Meanwhile, the country`s largest private bank PT. Bank Central Asia Tbk (BCA) reminded Bank Indonesia to remain on guard against potential liquidity tightening in 2019 pointing to the central bank`s policy of ahead of the curve.

BCA President Director Jahja Setiaatmadjasaid currently the bank liquidity is already tight as indicated by the Loan to Deposit Ratio (LDR) now already reaching 94 percent.

"The problem is the market liquidity already reached 94 percent. If third party fund grew only 8 percent and credit 12 percent next year, the LDR would expand. In this we have to be more watchful," Jahja said.

Reporting by Indra Arief Pribadi, A Saragih
Editing by Suharto

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