BI predicted that the economy will grow by 6.5 percent in the first quarter and will continue to expand in the second quarter, though the economic growth in the second quarter will not be as high as that of the first quarter.
Jakarta (ANTARA News) - Bank Indonesia (BI) has decided to maintain its benchmark interest rate at 5.75 percent in what it said is still relevant to the effort to curb inflationary pressure and boost economic growth despite the global economic slowdown.

The central bank is of the view that the domestic economy still shows signs of strong performance despite the global economic slowdown that led to uncertainties about the prospects of the global money market, BI spokesman Difi A Johansyah said, following a meeting of the BI`s board of governors here on Thursday.

BI predicted that the economy will grow by 6.5 percent in the first quarter and will continue to expand in the second quarter, though the economic growth in the second quarter will not be as high as that of the first quarter, he said.

He said strong domestic demand, particularly household consumption and investment, will remain the engine of economic growth. However, export growth is expected to be slow due to the global economic slowdown and declining prices of non-energy commodities in the world market.

The first-and second-quarter economic growth forecast is still relevant to the full-year economic growth target of 6.3-6.7 percent, he said.

The effort to weigh risks will show a downward trend apparently because of the impact of the global economic slowdown and the government`s plan in the energy sector unless stimulus steps, particularly fiscal policies are taken, he said.

He said the country`s balance of payment in the first quarter of 2012 is expected to record a lower surplus along with a deficit in the current transactions of the first quarter of 2012, which is expected to expand due to low export growth and high import growth.

Meanwhile, a surplus in capital and financial transactions will decline due to lower-than-expected portfolio investment inflows, he said.

He said the country`s foreign exchange reserves this year till February 29, 2012 reached US$112.2 billion, which is enough to finance 6.3 months of imports and government foreign debt repayments.(*)

Editor: Heru Purwanto
Copyright © ANTARA 2012