In line with the weak global demand, domestic economic growth would still be in a slowing trend.
Jakarta (ANTARA News) - Bank Indonesia predicts the country economic growth in 2014 will reach 5.1 percent which is the low ceiling of growth predicted by the bank before.

"The growth is predicted to be at the low part of the 5.1-5.5 percent range," BI governor Agus Martowardojo said to newsmen here on Thursday.

He said in line with the weak global demand, domestic economic growth would still be in a slowing trend.

In the third quarter 2014, Indonesias economy was recorded to grow 5.01 percent year-on-year or lower than in the second quarter recorded at 5.12 percent.

"Consumption is rising supported by strong private consumption and increasing governments spending on goods. Investment activities especially non-construction investment meanwhile is still weak," he said.

From an external point of view, the countrys export performance is still contracting especially because of the weak exports of primary commodities while manufacturing exports have consistently been improving, he said.

This has been reflected in the regional economic growth with the source of slowdown coming from weak economic growth in Sumatra as a commodity exporting region, he said.

Economic growth in the Indonesian eastern region meanwhile has been increasing in line with the resumption of minerals exports and growth in Java has relatively been high as manufacturing exports continued to improve, he said.

"In global terms the worlds economic recovery meanwhile is continuing although it is not balanced. The global economic recovery is still supported by US economy which has continued to improve, reflected by increasing production and declining unemployment" he said.

The US development has strengthened prediction of normalization of The Feds monetary policy in the middle of 2015.

The European and Japanese economies meanwhile have suffered a slowdown while the Chinese economy has also indicated a slowdown tendency.

Based on the developments Agus said the global price of commodities tends to drop including the price of crude oil following increasing supply in the midst of a weak demand.

Agus said through trade the global economic development would affect Indonesias export performance in the backdrop of improving manufacturing exports in the midst of primary commodity export hindrance.

With regard to financial development the BI governor said foreign capital inflow into Indonesia is predicted to still continue although it is still accompanied by high volatility due to The Feds monetary policy normalization plan.

"We will keep monitoring the variety of external risks with regard to assuring conducive situation for Indonesias economic development," he said.(*)

Editor: Heru Purwanto
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