Indonesia’s economic growth will slow to 5.3 percent in 2014 from 5.6 percent in 2013, according a report released by the Work Bank on December 16.
WB Country Director for Indonesia Rodrigo Chaves said that most of the slowdown has been driven by the softening of investment spending, growing by only 4.5 percent in the third quarter, reflecting mainly reductions in machinery and equipment investment .
Meanwhile, the US Federal Reserve’s asset purchase program (so-called “tapering”) continues to add to uncertainty, keeping global markets volatile and Indonesia’s external financing conditions tight.
Besides, the burden of fuel, energy and food subsidy spending impacts remarkably on capital expansion for infrastructure development projects in the country.
Rodrigo Chaves said the Indonesian Government and central bank should further structural reforms to support export performance and encourage faster long-term growth.
He also underlined the importance of improving business environment and simplifying trade-related regulations to attract investment and lift exports.
The current account deficit is projected to narrow from 31 billion USD (3.5 percent of GDP) in 2013 to 23 billion USD in 2014 (2.6 percent of GDP), due to slower import growth and a mild pick 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 secure higher quality external financing, particularly foreign direct investment.-VNA
WB Country Director for Indonesia Rodrigo Chaves said that most of the slowdown has been driven by the softening of investment spending, growing by only 4.5 percent in the third quarter, reflecting mainly reductions in machinery and equipment investment .
Meanwhile, the US Federal Reserve’s asset purchase program (so-called “tapering”) continues to add to uncertainty, keeping global markets volatile and Indonesia’s external financing conditions tight.
Besides, the burden of fuel, energy and food subsidy spending impacts remarkably on capital expansion for infrastructure development projects in the country.
Rodrigo Chaves said the Indonesian Government and central bank should further structural reforms to support export performance and encourage faster long-term growth.
He also underlined the importance of improving business environment and simplifying trade-related regulations to attract investment and lift exports.
The current account deficit is projected to narrow from 31 billion USD (3.5 percent of GDP) in 2013 to 23 billion USD in 2014 (2.6 percent of GDP), due to slower import growth and a mild pick 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 secure higher quality external financing, particularly foreign direct investment.-VNA
