WB slashes Indonesia’s growth forecast

Illustrative Image (Photo: cnbc.com)

Jakarta (VNA) – The World Bank (WB) has cut its projection for Indonesia’s economic growth from 5.3 to 5.1 percent this year, local media reported on October 6.

The Washington – based lender also revised the country’s growth will be at 5.3 percent in 2017 and 5.5 percent in 2018. 

Weak global trade and uncertainty over the Federal Reserve rate hike led to the cut, said Hans Anand Beck, WB Senior Economist. 

However, the projection is higher than the Asian Development Bank (ADB)’s one released last month. ADB predicted Indonesia’s economy would expand 5 percent this year and 5.1 percent in 2017 due to low investment in the private and public investment sectors. 

Private spending will remain the main driving force for the country’s economy. Consumer spending is forecasted to continue increasing due to a stable macro-economy and other financial policies, said the WB. 

The bank also highlighted challenges for the Southeast Asian country, including low commodity prices and low revenue. Tax collection in the country was only about 61 billion USD by the end of September, half of this year’s goal. 

El Nino and La Nina phenomena are liable to take its’ toll on Indonesia’s agriculture, leading to high food prices and inflation, said experts.-VNA