"Strong consumption will help Indonesia to continue its economic growth for this year and the next," Winfried Wicklein, head of the ADB representative office in Indonesia, stated at Jakarta on Wednesday.
Consumer spending is expected to maintain strong growth, backed by a rise in household incomes, employment, and low inflation.
He estimates inflation to stay stable, at 3.2 percent, for 2019 and 3.3 percent by 2020, so that it can help maintain the momentum of private spending.
"Core inflation may be maintained, and food prices will not change," Wicklein stated.
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Wicklein remarked that despite weakening growth among trade partners that influences Indonesia's trade balance, the current account deficit is estimated to remain in control at 2.7 percent of the gross domestic product (GDP) in 2019.
"However, investment and economic growth that has begun to accelerate may cause a current account deficit that can widen to 2.9 percent of the GDP in 2020," he pointed out.
At the same time, investment can potentially strengthen until the end of 2019 owing to progress in the development of national strategic projects to enhance the infrastructure network.
Moreover, Bank Indonesia trimming its interest rate to 5.25 percent also offers an injection of energy for credit growth, so that private investment will continue to improve.
"This is in accordance with the expectations of various new reform policies to improve the business climate and accelerate economic modernization," Winfried expounded.
Nonetheless, he stated that Indonesia’s economic fundamentals remain strong as was apparent from a well-managed fiscal position, price stability, and foreign exchange reserves in a safe position.
"However, stronger investment is yet required to propel growth, with a focus on competitiveness and human resource development," Winfried stated.
Furthermore, he projected Indonesia's economic growth to clock 5.1 percent in 2019, lower in comparison with 5.2 percent in 2018. However, with the support of robust domestic consumption, Winfried estimates economic growth to increase by 5.2 percent in 2020.
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