BI Revises Target on National Economic Development

 
Fathan Qorib, Robert Sidauruk
 
Bank Indonesia (BI) has revised its targets for national economic development from 5.8% - 6.2% to 5.5% - 5.9. Perry Warjiyo, Deputy Governor of BI indicated that the revision was made based on predictions that national economic growth in 2014 will continue to struggling at the 5.7% level.
 
 “We have lowered the target for national economic development to 5.7%,” said Mr. Warjiyo at BI’s office in Jakarta last Friday.
 
Mr. Warjiyo further explained that there are at least three factors causing national economic growth to be sluggish. The first is slow growth in Indonesia’s trading counterparties, such as China. This has created a domino effect and resulted in overall sluggish momentum in global economic growth.
 
A second cause is that the price of commodities is predicted to remain unstable.
 
Finally is the fact that domestic consumption levels are not as high as BI’s previous predictions.
 
On this last factor, BI was previously confident that the 2014 general election would stimulate growth in short-term consumption. However, contrary to that prediction the general election has not significantly increased consumption levels.
 
“This political year has not affected consumption levels as much as previous general elections,” informed Perry.
 
Tirta Segara, Executive Director of the Communications Department at BI, also confirmed Mr. Warjiyo’s explanations. Mr. Segara said that slow movement in household consumption levels remains one of the biggest obstacles for national economic development.
 
In addition to the surprisingly low impact of the general election, Mr. Segara also explained that consumption levels are also affected by BI’s policy transitions for economic stabilization.
 
Another significant aspect contributing to the slow growth for national economic development is the economic recovery in several countries. Such circumstances have created an increase in the price of global commodities and placed Indonesia in an unfavorable position.
 
“The economic recovery in some countries has resulted in an increase in the price of international’s commodities,” explained Mr. Segara.
 
Nevertheless, Mr. Segara is of the view that investment growth in Indonesia is still showing promising improvement. In fact, BI predicts that investment other than in construction projects will increase in the second half of 2014.
 
“Although it is not as strong as previously predicted, our national exports will also increase this year,” added Mr. Segara.

(hot/kc)