Finance Minister Agus Martowardojo has said that the country`s economic growth would only reach about 6.3 percent this year, which is lower than the target set by the government for 6.5 percent in the 2012 state budget.
For next year, Coordinating Minister for Economic Affairs Hatta Rajasa has also predicted that the Indonesian economy will grow, but remain below the target of 6.8 percent set in the 2013 state budget due to the weak global economy.
The global economic crisis, which has affected the world market in recent years, has slowed Indonesian exports and is expected to continue next year. This year, slow exports have left a trade deficit in the country.
Therefore, according to the head of the fiscal policy agency of the finance ministry, Bambang Brodjonegoro, the country`s economic growth this year relied only on domestic consumption and investment.
He said that in the fourth quarter of this year, it would also be difficult to reach Indonesia`s economic growth target of 6.2 percent. Indonesia has lost support from exports to push economic growth, Bambang said
"Exports are sharply weakening, while imports are growing rapidly," he noted. He added that if Indonesia could meet its target in the fourth quarter, the country`s economic growth would reach 6.3 percent this year, but would remain below the target of 6.5 percent.
Indonesia`s imports in the January to October 2012 period were higher than its exports in the corresponding period, causing a deficit of US$516.1 million in its trade balance.
The trade balance of US$516.1 million is the balance between the US$158.66 billion in imports and US$159.18 billion in exports during the same period.
While it is unlikely to meet the economic growth target this year, which was set at 6.5 percent in the state budget, Minister Agus Martowardojo was optimistic that the country`s economic growth would reach 6.3 percent this year.
Further, Agus predicted that annual growth would be lower than 6.3 percent if the growth in the fourth quarter remained below the target range of 5.9 percent to 6.3 percent.
In the meantime, the government and the House of Representatives (DPR) have also fixed economic growth at 6.8 percent in the 2013 state budget.
However, many have predicted that economic growth next year would not reach that target.
"Our expectation in the 2013 state budget is 6.8 percent. But it seems that it might remain below the target. I think growth will be in the range of 6.3 to 6.5 percent. We must be realistic," Chief Economic Minister Hatta Rajasa said.
The global economy has shown no signs of improvement. It will, therefore, lower demand in developed countries and have an impact on export performance as a whole, he said.
"So I think we must be optimistic about it while, on the other hand, we must be careful by considering global developments," he said.
Hatta Rajasa added that among the efforts to maintain growth next year are raising investments and making Indonesia a production base for the Southeast Asian market.
"Signs of being a production base are already there. The growing industrial and manufacturing activities mean that the world has begun to see Indonesia as the best place to invest," he said.
To maintain growth next year, the government will not issue a policy that may lead to public unrest and disturb the growth target and national economic stability, he said.
He noted that the government would only raise power tariffs next year and is still undecided about raising the price of subsidized fuels.
For inflation can reach 7 percent if the government raises subsidized fuel oil prices next year, according to economist A Prasetyantoko of the Atma Jaya Catholic University.
"Inflation is predicted at 4.9 percent if there is no problem arising next year. But if subsidized fuel oil prices are raised, it would have a significant impact. Inflation can reach 7 percent," Prasetyantoko warned.
A lower economic growth prediction was also made by the National Economic Committee (KEN), which said that the country`s economy in 2013 would only grow at a rate of 6.1 to 6.6 percent.
"The economic growth will reach the upper limit of 6.6 percent if the global economy is improving and the lower limit of 6.1 percent if Europe is still unable to rid itself of its economic recession in 2013," KEN Chairman Khairul Tanjung said.
He added that next year`s economic growth was expected to be boosted by domestic consumption and investment.
Household expenditure would contribute about 2.6 to 2.9 percent to the 2013 economic growth and investment would reach 2.7 to 2.8 percent, while the contribution of the export sector was only expected to account for 0.0 to 2 percent.
"This means that Indonesia`s economy next year will rely on domestic strength," he added.
Prasetyantoko said Indonesia`s economic growth next year would still be above 6 percent, but lower than the set target of 6.8 percent.
"Indonesia`s economic growth still could reach a range between 6.2 percent and 6.3 percent in 2013," said Prasetyantoko on Friday.
The economist predicted that economic uncertainties, both at home and abroad in 2013, were still high, and would affect the country`s economy.
"The external factors that would affect the country`s economy include the global economic crisis in Europe, which might worsen in 2013," he said.
He also mentioned the possibility of the government raising subsidized fuel oil prices as an internal factor that would slow the country`s economic growth.
"If subsidized fuel oil prices are raised, it would affect the country`s economic growth," Prasetyantoko noted.
Also, a pessimistic prediction is being made by the Indonesian Entrepreneurs Association (APINDO), which said that economic growth would remain below 6 percent.
In the 2013 state budget, the government and parliament agreed to set economic growth at 6.8 percent, the inflation rate at 4.9 percent, the rupiah`s exchange rate against the dollar at Rp9,300, and interest on three-month state treasury notes at 5 percent.
(A014/KR-BSR/A014)
Reporter: Andi Abdussalam
Editor: Jafar M Sidik
Copyright © ANTARA 2012
