Thursday, 24 July 2008

World Bank cuts Indonesia 2008 growth forecast to 6 pct due to global slowdown

The World Bank reported it has revised down its growth forecast for Indonesia to 6 percent this year from 6.4 percent forecast earlier as Indonesian exports are likely to slow down due to a weaker global economy. The World Bank sees Indonesia's export growth slowing to 7 percent this year from 8 percent last year."Domestic demand, especially investment and consumption, should remain robust as the economy's momentum carries into 2008," it said in its latest report.With higher international fuel prices and subsidies, Indonesia's budget deficit is projected to widen to over 2 percent of GDP from 1.3 percent in 2007, with the debt-to-GDP ratio falling further to 31 percent by the end of 2008 from 35 percent, the bank was quoted as saying by Thomson Financial.The bank, however, expects Indonesia's economy to bounce back again in 2009."Indonesia is expected to weather the global slowdown reasonably well, with growth slowing to 6 percent in 2008 before returning to 6.4 percent in 2009," it said.Last year Indonesia's economic growth accelerated to a 10-year high of 6.3 percent.The drivers of growth shifted over the course of the year, it said.During the first half of 2007, the economy drew strength from external demand while in the second half, the driving force was investment coupled with consumer demand.Investment picked up substantially in the year, reaching 24.8 percent of GDP.This growth rate reduced Indonesia's poverty rate to 16.6 percent from 17.8 percent a year earlier, based on the government's measurement of the poverty line, it said.The growth rate also reversed the recent trend towards increasing unemployment as the jobless. (

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