Indonesia’s economic growth will slow to 5.3 percent in 2014 from 5.6percent in 2013, according a report released by the Work Bank onDecember 16.
WB Country Director for IndonesiaRodrigo Chaves said that most of the slowdown has been driven bythe softening of investment spending, growing by only 4.5 percent in thethird quarter, reflecting mainly reductions in machinery and equipmentinvestment .
Meanwhile, the US FederalReserve’s asset purchase program (so-called “tapering”) continues to addto uncertainty, keeping global markets volatile and Indonesia’sexternal financing conditions tight.
Besides, theburden of fuel, energy and food subsidy spending impacts remarkably oncapital expansion for infrastructure development projects in thecountry.
Rodrigo Chaves said the IndonesianGovernment and central bank should further structural reforms tosupport export performance and encourage faster long-term growth.
He also underlined the importance of improving business environmentand simplifying trade-related regulations to attract investment and liftexports.
The current account deficit is projected tonarrow from 31 billion USD (3.5 percent of GDP) in 2013 to 23 billionUSD in 2014 (2.6 percent of GDP), due to slower import growth and a mildpick up of export demand, the report said.
It,however, noted that in order to address the current account deficit,Southeast Asia’s largest economy needs to promote exports and securehigher quality external financing, particularly foreign directinvestment.-VNA
WB Country Director for IndonesiaRodrigo Chaves said that most of the slowdown has been driven bythe softening of investment spending, growing by only 4.5 percent in thethird quarter, reflecting mainly reductions in machinery and equipmentinvestment .
Meanwhile, the US FederalReserve’s asset purchase program (so-called “tapering”) continues to addto uncertainty, keeping global markets volatile and Indonesia’sexternal financing conditions tight.
Besides, theburden of fuel, energy and food subsidy spending impacts remarkably oncapital expansion for infrastructure development projects in thecountry.
Rodrigo Chaves said the IndonesianGovernment and central bank should further structural reforms tosupport export performance and encourage faster long-term growth.
He also underlined the importance of improving business environmentand simplifying trade-related regulations to attract investment and liftexports.
The current account deficit is projected tonarrow from 31 billion USD (3.5 percent of GDP) in 2013 to 23 billionUSD in 2014 (2.6 percent of GDP), due to slower import growth and a mildpick up of export demand, the report said.
It,however, noted that in order to address the current account deficit,Southeast Asia’s largest economy needs to promote exports and securehigher quality external financing, particularly foreign directinvestment.-VNA
