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Indonesia's economy expected to grow 5.6 percent next year: projection

Xinhua, December 14, 2016 Adjust font size:

Indonesia is predicted to see its economy grow 5.3 to 5.6 percent next year, driven by low rate benchmark, public and government spending and positive impacts from government's economic reform packages.

The estimation comes from an outlook projection compiled by the Indonesian Institute of Sciences (LIPI) issued on Wednesday.

The think tank's growth estimate for next year is higher than the assumption in the state budget which initially set the growth rate at 5.1 percent.

Researcher at LIPI's center of economics studies Maxensius Tri Sambodo said the moderate growth level was predicted to reach 5.45 percent.

Sambodo said public and government spending would become major drivers to spur the nation's growth, supported by controllable inflation estimated to reach 4 percent throughout next year.

The low benchmark rate and sound implementation of government's economic reform packages would eventually lead to significant improvement in investment sector, Sambodo added.

"The positive impacts of economic reform packages that simplify investment procedures thus facilitating it would take into effect next year. It would pave the way for more investment to some in Indonesia," Sambodo explained.

The Indonesian central bank retained the 4.75 percent benchmark rate last month in an anticipation of possible economic upheaval following the results of the U.S. presidential election and the stable national macro economy parameters.

The Indonesian government has issued 14 economic reform packages in the last two year, aimed at attracting foreign investors.

Those programs have made Indonesia's Ease of Doing Business (EODB) rank rose up to 91 from the previous 106, according to the latest global EODB index rating recently compiled by the World Bank.

LIPI reminded on possible pressures in exports due to slow recovery in Indonesia's existing trading partners that take significant volume of the nation's export commodities.

New strategies need to be outlined in diversifying export destination countries, particularly to countries in the Middle East, Africa and South America, the think tank researcher pointed out.

Indonesia has revised its growth estimate this year to 5.1 percent from the targeted 5.2 percent due to the ensuing global economy downturn. Endit