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Bank Indonesia revises down economic growth projection

17th June 2017 | 5.982 Views
Bank Indonesia revises down economic growth projection
Bank Indonesia Governor Agus Martowardojo (ANTARA /Humas Bank Indonesia)
Jakarta (ANTARA News) - Bank Indonesia Governor Agus Martowardojo said the central bank has revised down its target for the countrys economic growth this year from 5.2 percent to 5.17 percent year-on-year.

"I foresee there is indeed a correction mainly in the third quarter, but the contribution in the whole second semester would be better," Agus said here on Friday.

He said until June 2017, the domestic economy is still in the process of recovery. The monetary policy of the Central Bank in June maintaining the "7-Day Reverse Repo Rate" at 4.75 percent was also intended to maintain the momentum of domestic economic recovery and macro economic stability and financial system.

In the second quarter of 2017, an increase in investment would be the main driver of economic growth in addition to household consumption and exports, he said.

He said improving condition of global economy and increases in commodity prices would contribute to drawing investment into the country.

In addition, the types of investment flowing into the country begin to vary not only for infrastructure, he said, adding, "so far investment has been dominated infrastructure, but now there has been growing investment in other sector such as construction sector."

Therefore, the central bank was optimistic the economic growth in the second quarter was better than in the first quarter, when the economy grew 5.01 percent year-on-year, he said.

He noted, however, the contribution of the private sector is not yet as expected as both the banking and corporate industries are still in the process of consolidation in 2016.

Therefore, Agus said he foresaw the economic growth would be slightly slower in May, 2017. In April, 2017, banking credits grew 9.47 percent yoy.

Based on data of the Central Bank, the non performing loan rate in April, 2017 was 3.1 percent and credit growth until April was quite good higher than in December, 2016 . In May, however, there was a slight decline more on the baseline.

"This year we are optimistic , credits would grow 10-12 percent," he said.

Earlier the central bank predicted the countrys economy would grow 5.11 percent in the second quarter and higher than 5.2 percent in third and fourth quarters after a 5.01 percent in the first quarter.(*)