Jakarta (ANTARA News) - An economist has predicted that Indonesia`s gross domestic product (GDP) this year will increase to 6.5 percent from 6.3 percent last year on strong household consumption and investment.

"The GDP growth is expected to accelerate to 6.5 percent in 2013 from 6.3 percent in 2012," Seto Wardono of PT Indo Premier Securities said here on Tuesday.

Household consumption and investment will continue to contribute to the GDP growth in 2013 besides exports, he said.

"Exports will recover albeit at an insignificant pace," he said.

He predicted the state budget will continue to suffer a deficit as a result of the effort to maintain the rupiah`s exchange rate.

The rupiah`s strong exchange rate is needed to improve the country`s trade balance, he said.

He predicted the rupiah`s exchange rate in 2013 will average Rp9,717, down from Rp9,380 per dollar in 2012.

The government will likely go ahead with its loose economic policies to support domestic demand this year by, among other things, providing a high amount of fuel subsidies and reducing the amount of untaxed income.

"We still believe the domestic economy will remain strong because of loose fiscal and monetary policies," he said.

Bank Indonesia (BI) will likely maintain its low benchmark interest rate to encourage the public to seek bank loans.

In addition, consumers` strong confidence in their future income, available job opportunities and business climate will also increase domestic demand, he said.

"The consumer confidence index is still considered optimistic. Although BI latest data show the index drops it still considered optimistic," he said. (S012)

Editor: Kunto Wibisono
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