"We have set a realistic growth target of 5.9 percent, which is achievable. The previous target of 6.3 percent growth was not realistic," Chief Economic Minister Hatta Rajasa said.
Jakarta (ANTARA News) - Chief Economic Minister Hatta Rajasa has announced that the economic growth target for this year has been set realistically at 5.9 percent, instead of the 6.3 percent growth assumed in the revised 2013 state budget.

"We have set a realistic growth target of 5.9 percent, which is achievable. The previous target of 6.3 percent growth was not realistic," the minister stated here on Tuesday.

He said the revised growth target could be achieved by making various efforts to stabilize the economy, such as reducing the current account deficit.

"I am optimistic that we can make the economy grow by 5.9 percent this year if we work hard to stabilize the rupiah exchange rate and minimize the current account deficit," Hatta continued.

The minister also noted that recent changes in the global and domestic economic environment made it necessary for the government to revise down its economic growth projection from 6.3 percent to 5.9 percent.

"The economic situation has changed so fast, because of both external and internal pressures. However, what is more important is that industries should not lay off their workers," he pointed out.

Therefore, Hatta explained, the government has lowered its economic growth target for this year.

"Expecting a 6.3 percent growth rate is not realistic anymore. We may be able to achieve 5.9 percent growth if we can stabilize the rupiah and narrow the current account deficit," the minister added.

Earlier, Finance Minister Chatib Basri announced that the government`s stimulus package to contain the widening current account deficit (CAD) would lead to the Indonesian economy growing at a slower pace this year.

"The economy will have to grow at a slower rate if we want to contain the current account deficit. Therefore, the government has projected economic growth for this year at 5.9 percent," he said.

Basri lauded Bank Indonesia's decision to increase its benchmark interest rate by 50 basis points, from 6.5 percent to 7.0 percent, as part of its efforts to prevent the current account deficit from swelling further.

However, he pointed out that the BI rate hike would slow down credit growth, which could negatively affect investments' one of the key drivers of national economic growth.

The minister stated that a drop in investments would have a negative impact on the real sector and could result in mass layoffs. Therefore, he continued, the government introduced a stimulus package to avoid mass layoffs.

"We cannot turn a blind eye to the present situation. Therefore, we have introduced a package of economic policies to avoid mass layoffs. We had predicted that Bank Indonesia would take this step," Basri concluded.(*)

Editor: Heru Purwanto
Copyright © ANTARA 2013