Macroeconomic Forecast Indonesia

September 2006 | Macroeconomic Forecasts

BMI View: While macroeconomic stability is returning to Indonesia, with inflation set to fall rapidly in Q406 and interest rates already being lowered, we have yet to see the re-emergence of high quality growth. Expansion surprised on the upside in Q206, rising to 5.2% y-o-y from 4.6% in Q106, but it was driven by government expenditure and high prices of commodity exports. Investment, which is essential for job creation amid unemployment of more than 10%, actually fell year-on-year, while consumption is also still weak. As stability returns, we expect these sectors to strengthen, but are retaining our weak 5.0% growth

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