Bank Indonesia (BI) projects that the economy will grow between 5.1 and 5.2 percent in the first quarter of 2016 and that easing monetary policy will be more effective after the new benchmark interest rate is applied.
BI’s executive director on economy and monetary policy, Juda Agung, said the government’s expenditures increased significantly in the first quarter, along with the acceleration of government infrastructure projects.
“It’s going to grow around 5.1 to 5.2 percent, mostly driven by government spending. Capital expenditures jumped by 161 percent compared to first quarter of 2015,” has said in Jakarta on Thursday.
However, he further said private investment had yet to increase in the first quarter. He predicted the increase in private investment would be registered in the second quarter of the year.
Tirta Segara, BI’s executive director of communications, added that household consumption would remain strong in the second quarter.
Retail sales and motor vehicles have begun to grow recently as consumer confidence continues to improve.
Meanwhile, the performance of some export commodities has also begun to show improvement, particularly in textiles, electrical equipment and passenger vehicles. In addition, Indonesia’s export commodity prices, such as palm oil, rubber and tin, are on an upward trend.
“Overall, growth will improve in the second quarter, supported by increased consumption and investment,” Tirta said.
Source : The Jakarta Post, April 22, 2016