"Until the first semester we have indeed suffered a trade deficit but most of the imports that have triggered the deficit are capital goods," Darmin said.Jakarta (ANTARA News) - Indonesia`s economy is not yet overheated, central bank governor Darmin Nasution said here on Monday.
He said composition of imports is still productive while core inflation is down and the ratio of credits to the GDP is still low.
"Until the first semester we have indeed suffered a trade deficit but most of the imports that have triggered the deficit are capital goods," he said at Indonesia Investment Forum.
He said capital goods are categorized as productive materials while one of the indicators of an overheated economy is consumptive imports to meet domestic demand which could not be fulfilled by local products.
"Imports of capital goods would even make Indonesia`s economy to grow healthy as the goods are productive in nature and so in view of that the present trade deficit does not reflect overheating," he said.
He said the ratio of credits to the GDP is also still below 31 percent showing that the economy could still grow further.
"Most of credits that grew in the first semester meanwhile were credits for working capital and investment and not consumptive credits," he said.
Darmin said Bank Indonesia would continue controlling the growth of consumer credits to remain sustainable while at the same time supporting the development of financial capacity.
With regard to inflation which is also one of the indicators of whether an economy is already overheated or not Darmin said that the core inflation (excluding oil fuel hikes) could be suppressed to 4.5 percent in the first semester.
"Meanwhile manpower market in Indonesia still shows a surplus," he said.
He said although unemployment could be lowered to 6.8 percent the number of Indonesian younger generation entering workforce is still big so that the manpower market is still very competitive.(*)
Editor: Heru Purwanto
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