Indonesia GDP could grow by 7.0 pct in 2007 if infrastructure projects sped

Jakarta (Antara News) - GDP could grow 7 pct next year if the government speeds up infrastructure projects, Bank Internasional Indonesia's chief economist Ferry Latuhihin said.

"There is a chance for the economy to grow 7 pct next year, if the government accelerates the development of infrastructure projects," Latuhihin told a seminar here as reported by XFN Asia.

He said investment, both from the government and private sectors, along with a recovery in consumer demand will be key drivers of the economy next year.

"Our economy is now coming out of the short-term pressure caused by the rise in fuel prices last year," he added.

Latuhihin added that robust global demand for commodities should also benefit exports next year, while an expected slowdown in the US economy in 2007 is likely to have a limited impact as a significant portion of Indonesia's exports now go to China and India.

He sees consumer demand picking up on the back of falling inflation and interest rates, with CPI seen at 5.62 pct by the end of this year and the BI rate, at 9.75 pct from 10.25 pct currently. Inflation next year is seen picking up slightly to 6-7 pct with the BI rate falling to 8 pct.

The government is now picking GDP to grow 6.3 pct in 2007, higher than its revised GDP growth forecast of 5.8 pct.

"The government should easily reach this growth target if it speeds up infrastructure projects and boosts investment including foreign investment," he said. (*)
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