![]() ![]() ones start to increase, which many expect by mid-2015, to prevent capital outflows and a plunge in the rupiah. However, in the short term it will hit consumers’ disposable income, although handouts will soften the blow for the poorest.īank Indonesia, the central bank, is likely to raise interest rates again when U.S. This is a “crucial step” toward a “new trend level of growth”, said Leong. To free up funds for public investment in infrastructure, Widodo plans to slash subsidies by raising retail fuel prices. Sliding global prices for palm oil, rubber and other commodities that Indonesia produces are pinching private consumption - the main driver of growth in recent years - which expanded by 5.44 percent in the third quarter down from the previous quarter’s 5.59 percent. Fixed investment grew by just 4.02 percent in the third quarter, the slowest since 2009. Stiff rises in Indonesia’s interest rates last year aimed at closing a big current-account deficit have depressed domestic demand. Next year’s budget is based on the assumption that it will be 5.8 percent. Exports are not going to pick up much and if he’s going to get there it’s mostly going to have to be through investment,” said Dan Martin at Capital Economics.īambang Brodjonegoro, Widodo’s finance minister, said recently that growth wouldn’t reach 7 percent until at least 2016. ![]() 20, has set himself a target of lifting annual growth to 7 percent - the minimum economists say is necessary for the country to reach a decent standard of living before its population starts to age in 15 years’ time. ![]() A 100,000 Indonesian rupiah note is seen through a magnifying glass among other Southeast Asian currency note in this photo illustration taken in Singapore March 14, 2013. ![]()
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