Tuesday, 18 August 2009

5.0 Percent Economic Growth in 2010

In Financial Notes and Draft State Revenue and Expenditure Budget (RAPBN) 2010, economic growth was estimated at 5.0 percent. Sources of economic growth would come from domestic demand and increase of offer. Besides through the improvement of welfare of government officials, members of Indonesian armed/police forces, and retirees, through increase of salaries, economic growth in 2010 would also be accelerated by fiscal stimulus in order to increase work opportunities through basic infrastructures, social protection for the poor, and labor-intensive projects that absorb many laborers.

Export was estimated to be relatively slow but improved, if compared to that in 2009 because the world economy was predicted to experience a slight increase. From aggregate demand side, economic growth would significantly be affected by various efforts to improve the real sector, progress in infrastructure development.

In line with increase of domestic demand due to economic recovery and commodity prices that started to increase, inflation in 2010 was predicted to be higher than in 2009 that reached 5.0 percent. Good coordination and harmonization of policies between Bank Indonesia and Government would make inflation target more credible.

In addition to Bank Indonesia’s carefulness in implementing its monetary policy and stability of the Rupiah exchange rate, the increasing economic activities were estimated to be able to be balanced from the production side, in line with increase of investment. Consequently, price pressures on prices of goods as a whole.

Fluctuation of prices in the global commodity market and high global crude oil prices were estimated to bring pressures on national inflation. But, the government will always and continuously evaluate the fiscal policy so it will go hand-in-hand with the monetary policy. From the offer side, the government would maintain availability of supply, especially supply of products that had a strategic role in affecting fluctuation, such as rice and oil fuels.

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