Muhamad Al Azhari & Ardian Wibisono

Motorbikes are readied for export at a Honda assembly factory in Jakarta. (Photo: Safir Makki, JG)

BI Predicts Growth of 4.4% This Quarter

Recovering exports and steady household spending will fuel fourth-quarter economic growth of 4.4 percent compared with the same quarter last year, the central bank predicted on Thursday.

Bank Indonesia also forecast full-year GDP growth of 4.2 percent, after predicting growth in the upper range of 4 percent to 4.5 percent earlier this year. The government had forecast full-year growth of 4.3 percent in its revised budget.

The Central Statistics Agency (BPS) last week reported that the economy had expanded by 4.21 percent year over year in the third quarter.

Darmin Nasution, Bank Indonesia’s senior deputy governor, said the central bank expected inflation to remain moderate at below 4 percent this year, creating room for household spending to grow steadily. The rupiah’s recent strength against the dollar reflected the country’s strong economic fundamentals, he said.

“Following upbeat third-quarter growth, fourth-quarter GDP growth could also come in on the strong side of the 4.6 to 4.7 percent band,” said Johanna Chua, an economist with Citigroup in Singapore.

Another economist, Enrico Tanuwidjaja, of OCBC Bank in Singapore, forecast year-on-year growth of 4.5 percent in the fourth quarter. OCBC Bank has raised its 2009 forecast from 3.8 percent to 4.3 percent, and its 2010 forecast from 4.8 percent to 5 percent.

“This takes into account solid economic fundamentals and private consumption as well as signs that the real economic recovery is gaining traction,” Enrico said.

Darmin said year-on-year loan growth was 7 percent as of the end of October, a slowdown from the 8.7 percent recorded at the end of September.

He said current monetary policy is still seen as appropriate to support the economic recovery. BI this month kept its benchmark interest rate at 6.5 percent, citing easing inflation, the stronger rupiah and the economic recovery.