Bank Indonesia Optimistic with Economic Growth of 7 Percent

• May 25, 2017

TEMPO.CO, Jakarta – Bank Indonesia expressed optimism that the Indonesia’s economic growthwould stand above 7 percent this year after the country faced global uncertainty due to the US monetary policy and plummeting commodity prices last year.

“To ensure the prosperity of Indonesian people, 5 percent [economic growth] wouldn’t be enough. [The economy] needs to grow above 7 percent. It would take efforts in the form of structural monetary reform in terms of fiscal and monetary, as well as in the financial sector,” the governor of the central bank Agus Martowardojo said at his office in Jakarta today, May 24.

Agus added that an economic growth of above 7 percent would be feasible provided that the macroeconomic stability could be maintained. He also said a financial system with strong capitalization and a well-maintained payment system would support a healthy economy.

“A healthy economic growth cannot be attained without macroprudential and financial system stabilities,” Agus explained.

Marwan Cik Asan, deputy chairman of House of Representatives’ Commission XI overseeing financial and banking affairs, said that Indonesia could fall into the middle-income trap if the country’s economic growth remained at around 5 percent until 2030. According to him, the government must boost the economic growth to 10 percent.

Fiscal Policy Agency head Suahasil Nazara said that the economic growth assumption between 5.4 percent and 6.1 percent this year could be attained with a condition if the government was able to address structural and monetary challenges. In addition, the government must strive to maintain fiscal credibility, investment growth, trade balance, and consumption.

“If those [requirements] are met, an economic growth between 5.4 percent and 6.1 percent can be attained. We can reach the range with the current condition,” Suahasil said.

PUTRI ADITYOWATI

Source: https://en.tempo.co/read/news/2017/05/24/056878326/Bank-Indonesia-Optimistic-with-Economic-Growth-of-7-Percent