Indonesia's economy predicted to grow 5.8 percent in first quarter

... if the policy was no longer tight and the target of current account deficit was met, the government will have room to maneuver... "
Jakarta (ANTARA News) - Finance minister Chatib Basri had predicted Indonesia's economy grew 5.7 to 5.8 percent in the first quarter of 2014, primarily due to consumer spending.

The minister said here on Monday consumer spending was expected to rise in March, although the impact had not been felt as of now.

He said the country's economy had grown also because of the improving performance of national exports.

He said the economic growth until the end of this year was still predicted to be at the estimated range of between 5.8 percent and 6.0 percent, which was slower because the government was still conducting economic stabilization efforts to improve its current account.

"Sources of growth were reduced because the interest rate was up, causing the economic growth in 2014 to slow down. The government wanted the current account deficit to be stable until the end of 2014," he said.

He added that the economic growth will improve again in 2015 to reach up to 6.1 percent, supported by investment performance and government spending following positive sentiment for the new government.

"My prediction was if the policy was no longer tight and the target of current account deficit was met, the government will have room to maneuver. With contribution from investment and government spending, it was hoped it could reach 6.1 percent," he said.

The World Bank had predicted that Indonesias economy would still face a number of challenges due to uncertainty of investment level and exports decline that would curb the economic growth to 5.3 percent in 2014.

"Global growth showed a positive signal, but Indonesia was facing various challenges, including the exchange value of trade, which had not changed; higher interest rates; and policy uncertainty," the banks economist Jim Brumby said.

The Asian Development Bank, however, predicted Indonesia's economy would grow around 5.7 percent in 2014, which was marginally lower than in 2013.

"The ADP predicted Indonesia's economic growth would decline marginally to 5.7 percent in 2014 and rise up to 6.0 percent in 2015," ADB country director Adrian Ruthenberg said.

He said the ADBs prediction was based on the assumption that the general elections on April 9 would go smoothly and the government would take steps to improve the investment climate.