"We will pay special attention to the short-term impacts that will be manifested in financial channels in the form of a decline in the index of the stock exchange, indicators of rising debt risks, pressures resulting in capital reversals from emerging markets including Indonesia by global investors," he said when presenting the results of the central bank`s board of governors` meeting here on Tuesday.
He said the global economy`s performance was expected to decline as shown by a slowdown in production activities and retail sales accompanied by consumers` weak sentiment in advanced countries and corrections to the prices of a number of international commodities.
On the other hand, inflation was dropping although state inflation in emerging markets was still relatively high causing a shift in monetary policy responses to a neutral or accomodative mode, he said.
In the future, on the whole the Bank Indonesia board of governors had seen a declining tendency in economic growth in the advanced countries, a slowdown in world trade and a decline in the prices of global commodities.
In the financial sector, the high excess in global liquidity and investors` risk perception meanwhile would continue to encourage flows of foreign capital into emerging economies including Indonesia in the form of direct foreign capital investment or portfolio investment.
In the BI board of governors` view, Indonesia`s economic fundamentals and banks had remained strong in the midst of increasing worries over the world`s economic prospects.
National economic growth in the fourth quarter of 2011 was predicted to be higher, driven especially by consumption and investment activities making it possible for overall growth in 2011 to reach 6.6 percent.
Economic growth in 2012 meanwhile was predicted to reach around 6.5 percent.
Darmin said Indonesia`s balance of payments (NPI) in the fourth quarter of 2011 was predicted to post a surplus after suffering pressures from capital outflows in the previous quarters.
"As a whole, our NPI in 2011 is predicted to record quite a big surplus and this is likely to continue in 2012 supported by continuing surpluses in capital and financial transactions in the form of portfolio investment or direct investment," he said.
Accordingly, the country`s foreign exchange reserves by the end of September 2011 were recorded at US$114.5 billion or equal to 6.5 months of imports and payment of public foreign debts.
"The total amount of our foreign exchange reserves is more than enough to support the stability of the rupiah`s exchange rate," he said.
He said the rupiah`s exchange rate in the third quarter of 2011 was pressured especially in September 2011. In the third quarter of 2011, the rupiah`s exchange rate dropped 2.42 percent to Rp8,790 against the US dollar with an increasing volatility.
"But the depreciation of the rupiah is still in line with the movement of the exchange rate of the currencies of the countries in the region," he said.
Pressure on the rupiah among others was caused by increasing global risk factors due to worries over the world`s economic prospects and increasing demand for foreign exchange to pay imports which also helped pressured the rupiah exchange rate.
Going ahead, Darmin said Bank Indonesia would keep maintaining the stability of the rupiah exchange rate to support the stability of macro-economy.
(Uu.H-YH/HAJM/B003)
Editor: Priyambodo RH
Copyright © ANTARA 2011
