BI Doubts household consumption growth to reach target

Jakarta (Antara News) - Senior Deputy Bank Indonesia (BI) Governor Miranda Goeltom has expressed doubt that the country`s household consumption growth in 2008 will reach the government-set target of 5.7-6.2 percent.

"In the past five years household consumption grew only 2.3-4 percent. Last year it expanded 4 percent. If it the target for next year is set at more than 5 percent, the government needs to explain where the sources of the growth will come from," she said after a meeting with the House of Representatives` budget committee here on Thursday.

"This does not mean that the target will not be achievable but we must make sure that the people`s purchasing power is fairly high and the inflation rate is fairly low," she said.

Bank Indonesia Governor Burhanudin Abdullah said at a meeting with the House`s Commission XI on finance, national development planning and non-bank financial institutions on Tuesday that the central bank had set the target of household consumption growth for this year at 4.2-5.2 percent.

He said the target was based on the people`s low purchasing power and the high unemployment rate.

"In our view, the people`s purchasing power is still limited as can be seen from the ratio of savings to gross domestic product which is tending to decline. The ratio of consumption credit to disposable income is fairly high, jumping to 37 percent from 22 percent previously," he said.

Bank Indonesia has projected the country`s economic growth for 2008 at 6.2-6.8 percent, or lower than the government`s economic growth forecast of 6.8-7.0 percent.

The central bank also has estimated investment growth in 2008 at 15-17 percent, or higher than the government`s projection of 14.5-18.2 percent. (*)
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