Urip Hudiono, Jakarta – Investments and exports are expected to contribute more to Indonesia's economic growth next year, giving an additional boost to the slow but sure revival in consumption, a central bank official says.
With a "more balanced, structured economy" ahead, Indonesia's gross domestic product next year is projected to maintain its strong growth and come in higher than this year's estimate of 6.3 percent, Bank Indonesia's director for bank research and regulation Halim Alamsyah said.
Per capita GDP should also reach some US$2,000 next year, up from around $1,800 this year.
"Consumption will still be the economy's main driving force, but it looks like we're going to experience an upward cycle in investment as well," Halim said Wednesday at an economic outlook discussion organized by ABN Amro.
"This can be seen, from one aspect, in the rising trend in bank lending, which we will see continuing next year." Data from BI shows that bank lending amounted to Rp 980 trillion (US$105 billion) as of the end of October, up 23 percent from the same period last year.
Although consumer lending has of late been recording the fastest growth, Halim said both investment and working capital loans had also increased by more than 20 percent. BI expects bank lending to grow by 24 percent next year.
Data from the Investment Coordinating Board (BKPM), meanwhile, shows that realized investment nearly doubled to Rp 114.7 trillion up to the end of October.
Indonesia's growth picked up in this year's third semester, reaching 6.5 percent, with consumer accounting for 3 percent of this. Investment came in second to contribute 1.9 percent, while net exports accounted for 1.1 percent.
Halim said that more investment ahead would likely mean more imports of capital goods and raw materials, but that this would result in more production and exports.
As long as exports were strong, keeping the balance of payments in the black, Halim said that the rupiah would continue to trade at a level that was favorable for consumption, investment and exports.
The balance-of-payments surplus until the third quarter to September stood at US$13.6 billion, says BI, and is expected to reach $15.6 billion in 2008.
Under the current circumstances, the central bank would play out its rate policy so that it remained favorable to both fixed-capital and portfolio investments, while maintaining a cautious approach.
"We're still concerned about the current excess liquidity in the market," Halim said.
"There's a possibility of an upward inflationary trend ahead, so we'll also be watching out for that." The central bank cut its benchmark BI rate to 8 percent last week.
Indonesian Stock Exchange director for reporting Eddy Sugito said a BI rate of between 8 and 8.5 percent would be favorable for the country's stock market as it would provide room for listed companies to continue growing on cheaper investment and costs.
He mentioned several sectors of the economy that remained attractive to investors, such as telecommunications, banking and mining.