BI estimates economic growth at 5.17% in 2017

JAKARTA. Governor of the Indonesian Central Bank (BI) Agus Martowardojo has lowered the projection of economic growth for 2017 to 5.17% year-on-year (yoy), from 5.2 percent yoy.

"I see a major correction in the third quarter (July-September), but the contribution in the second semester (July-December) will be better," Martowardojo stated here on Friday.

According to the BI governor, until June 2017, domestic economic activities are still in the process of recovery.

BI's monetary policy to maintain a seven-day Reverse Repo Rate of 4.75% is aimed at maintaining the momentum of recovery in the domestic economy while sustaining macroeconomic stability and the financial system.

In the second quarter of 2017, Martowardojo noted that the increase in investment will be a key driver of economic growth apart from household consumption and exports.

According to Martowardojo, the global economic growth projection continues to improve, and the rising commodity prices will draw investment into the country.

"Initially, investment was largely directed to infrastructure development, but now, it covers the non-construction sector," he noted.

BI believes that economic growth in the second quarter of 2017 will be better than 5.01% yoy recorded in the first quarter. "However, the figure cannot yet be revealed," Martowardojo said.

On the other hand, he noted that private and corporate contributions have not been maximized, as banking and corporate industries are still consolidating after a slowdown in performance in 2016.

Hence, Martowardojo said the growth of bank credit will be slightly slow. In April 2017, bank credit grew by 9.47%  yoy. BI's data indicated that the ratio of non-performing loans in April 2017 had reached 3.1%.

"Credit growth until April was quite good, as it continues to show improvement compared to that in December 2016. However, in May 2017, it slightly decreased, but this year, we are confident of reaching 10-12%," Martowardojo noted.

BI has forecast that economic growth will be at 5.11 percent for the second quarter of 2017 and above 5.2%  in the third and fourth quarters.