Senior World Bank (WB) economist Jim Brumby has predicted that the Indonesian economic growth will slow to 5.3 percent this year as it still faces a number of challenges involving uncertain investment levels, high interest rates and declining export.

While global growth has shown positive signs, Indonesia is facing terms of trade which remain unchanged, higher interest rates and policy uncertainties, Brumby said at a recent press conference in Jakarta.


He further explained that its latest challenge relates to a ban on raw mineral export which has stoked uncertainty among long-term investors and put more burden on the state budget.


The WB projected that the ban will have a negative impact of 12.5 billion USD on net trade and 6.5 billion USD worth of losses in fiscal revenues from export and income taxes for the next three years.


It suggested the Indonesian government reform policies in support of economic growth which hit 5.78 percent last year, adding that it should adjust fuel prices to reduce the burden of energy subsidies which were predicted to increase to around 2.4 percent of gross domestic product (GDP), up from 2.2 percent of the GDP in 2013.


Bank Indonesia (BI) has revised the country’s 2014 economic growth outlook to between 5.5 and 5.9 percent from an earlier forecast of between 5.8 and 6.2 percent.


Last year, Indonesia attracted over 35 billion USD of investment.-VNA