IMF says Indonesia can maintain 6 to 7% economic growth

Washington (Antara News) - Indonesia will likely be able to continue to attain economic growth of 6 to 7 percent, the International Monetary Fund said Tuesday.

"Indonesia's economic performance has been strong," the IMF was quoted by Kyodo as saying in a statement issued after its annual review of the country.

"Growth could be sustained in at least the 6 to 7 percent range needed to alleviate poverty and
unemployment,"

The statement by the Washington-based institution said Indonesia's economy is
estimated to have grown 5.5 percent in 2006 and will be followed by growth of 6.0 percent in 2007 and 6.3 percent in 2008.

The IMF also said the value of the rupiah appears to be in line with economic fundamentals.

"While some estimates of equilibrium exchange rates suggest a modest undervaluation, and although the performance of manufacturing exports has been moderate relative to many competitors, the real effective exchange rate is broadly in line with fundamentals," it said.

The IMF said care should be taken when easing Indonesia's grip on credit.

"While the rupiah appreciation and moderating core inflation have opened room for limited interest rate cuts, the BI (Bank Indonesia) needs to exercise caution, keeping in mind the lags in monetary policy transmission," it said. (*)
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