Friday, 19 July 2019 | 04:15 WIB

World Bank Sees Indonesian Economy Grows 5.3 Percent in 2018

Illustration: Infrastructure development.

JAKARTA, NETRALNEWS.COM - The World Bank said the growth of Indonesia's Gross Domestic Product (GDP) is projected to rise from 5.1 percent this year to 5.3 percent by 2018. A favorable external environment, strong economic fundamentals, and progress in structural reforms are contributing factors for Indonesian economy.

Indonesia's real GDP growth remains stable at 5.0 percent year-on-year in the second quarter of 2017, unchanged from the first quarter. The growth in public consumption, which accounts for more than half of Indonesia's GDP, did not change in the second quarter despite favorable conditions. One of the causes of this is the temporary inflationary surge due to electricity tariff adjustments in the first half of 2017.

"Inflation has eased and is back in a position to meet Bank Indonesia's target of four percent this year," said Rodrigo A Chaves, World Bank Country Director in Indonesia, in the October 2017 Indonesia Quarterly Economic Quarterly report in Jakarta, Tuesday (10/03/2017).

He said that monetary policy is still accommodating with the recent declining interest rates policy by Bank Indonesia, while fiscal policy also slightly changed expansionary following the revision of the 2017 State Budget.

After soaring in the first quarter, export and import growth decelerated significantly in part due to falling commodity prices in the second quarter and the impact of the Eid al-Fitr (Lebaran) holiday. Weak export growth has caused the current account deficit to increase.

Improved spending compositions have resulted in greater public infrastructure investment in the first half of this year. Investment is a bright spot because it has experienced the most rapid growth since the last quarter of 2015, where it is driven by infrastructure and building investment.

"The limitation of infrastructure has long been a major obstacle to Indonesia's development, and a better and more planned infrastructure will help Indonesia promote growth and equity for more people," Rodrigo said.