Macroeconomic Forecast Indonesia

May 2005 | Macroeconomic Forecasts

The Indonesian economy, South East Asia's largest, posted strong growth during the first quarter of 2005 despite the damage caused by the December 26 tsunami. GDP expanded an inflation-adjusted 6.4% y-o-y compared with the previous quarter's growth of 6.7% as investment rose a double-digit 15.0%. The economy will slow during the second half of 2005, but the official target of a 5.5% expansion looks to be achievable. Our revised forecast of 5.4% real GDP growth is more or less in line with the consensus, according to our latest straw poll (conducted before the release of the first-quarter accounts). On average, our panel of eight investment banks, plus the Asian Development Bank and International Monetary Fund, expect growth of 5.3% in 2005 and 5.6% in 2006.

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