Macroeconomic Forecast Indonesia

September 2004 | Macroeconomic Forecasts

Higher interest rates will weigh down on domestic demand during the second half of 2004 as the central bank tightens monetary policy in a bid to rein in inflation. The consumer price index rose 6.7% y-o-y in August and, in its latest policy statement, Bank Indonesia refused to rule out interest-rate rises later in the year. Benchmark one-month SBI rates edged up to 7.38% at the bank's latest auction on September 1 from 7.37% a fortnight earlier. Our forecast of 4.5% real GDP growth in 2004 holds.

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