ADB cuts growth forecast for Indonesia

The Asian Development Bank (ADB) trimmed its forecast for Indonesia's economic growth this year to 4.9 percent from the previous estimate of 5.5 percent, the lender said in a statement on Tuesday.

The bank also cut its projection of the country's GDP growth next year to 5.4 percent from the previous estimate of 6.0 percent.

"Delay in economic recovery is primarily due to weaker-than- anticipated external demand and financial market volatility," Steven Tabor, ADB country director for Indonesia said in the statement.

"The impact of accelerated emphasis on deregulation, stronger infrastructure investment, and export recovery triggered in part by devaluation are likely to spur economic expansion in the coming year," he said.

A key driver of the expected growth is stronger public spending, which has been delayed largely by slow fund disbursement. Meanwhile, household consumption is expected to remain fairly robust.

"There is a risk to this growth prospect coming from global financial market turbulence, but the country's resilience against market volatility has improved, partly due to a more flexible exchange rate and market-driven adjustment to bond yields," Edimon Ginting, ADB deputy country director for Indonesia said in the statement.

Indonesia GDP expanded 4.71 percent and 4.67 percent, respectively, during the first and second quarter of this year, the slowest in six years, as government budget spending slowed amid subdued exports and investment, according to the country's national statistic bureau. Endi