RI’s economy to grow 6% in 2014: VP

JAKARTA. Vice President Boediono has said he is optimistic that with better control of food-price inflation Indonesia’s economy will grow by between 5 percent and 6 percent in 2014.

“I predict that our economic growth will improve next year although it is not likely to be over 6 percent as occurred in 2011. However, this cannot be avoided if we want a balance between stability and economic growth,” said Boediono.

He was speaking to journalists and foreign diplomats at the Jakarta Foreign Correspondence Club in Jakarta on Monday, as quoted by Antara news agency.

Boediono added that Indonesia’s inflation rate until the end of 2013 was expected to reach 8 percent and this figure was far above the country’s average inflation rate during the last several years, which was between 4 and 5 percent annually.

“There are several factors that have triggered such a high inflation rate, including the fuel price hikes and increases in non-rice food commodity prices,” he said.

Boediono was also confident that investment and consumer spending in 2014 would remain high. Activities centering on the 2014 general elections would likely contribute positively to growth as well, he said.

Boediono added that oil imports would probably reduce due to the government’s plan to shift from petroleum diesel to palm-oil based biofuels.

On economic growth and stability, the Vice President said Indonesia was still noted globally as a high-growth country. After enjoying stable economic growth of 6 percent annually, Indonesia’s economic growth fell to 4 percent when the economic crisis hit in 2008. The country later restored pre-2008 rates of annual GDP growth of 6 percent, exceeding growth in other countries with the exception of China.

Boediono acknowledged that Indonesia had been suffering a current-account deficit since the fourth quarter of 2011.

“This is caused by decreased export values due to declines in commodity prices in the international market. Moreover, imports remain high particularly of subsidized fuel for domestic needs,” said Boediono.

“In 2012, Indonesia’s growth was also still supported by investment and consumer spending that was relatively high despite weaker exports,” he went on.

Declining export values in 2013 were one of major causes of Indonesia’s weaker economic growth. Nevertheless, Boediono said, there were many positive factors that could raise enthusiasm in 2014, so that he was optimistic 6 percent growth was achievable for Indonesia in the midst of the ongoing global economic slow down.