JAKARTA (Yosefardi) – World Bank projects Indonesia’s economic growth only at 4.7% for 2015, following growth deceleration in the first quarter 2015, weakening investment and decreasing people’s consumption.
World Bank Chief Economist for Indonesia Ndiame Diop warns Indonesia to adapt to external condition, which may impact to economic growth decrease. China grows 3%, below the average in 2005-2011 and commodity investment starts to decrease. This decrease gives vast influence,” he says on Wednesday (July 8).
“Decreasing fixed investment and weakening people’s consumption recently have decreased Indonesia’s GDP growth,” Ndiame says as quoted from the World Bank’s site.
Diop states that the deceleration is highly affected by China’s deceleration, as the second largest economy in the world. Nevertheless, he mentions that Indonesia’s growth is relatively stronger than other countries exporting commodity to China, such as Brazil and South Africa.
Finance minister Bambang P.S. Brodjonegoro noted that the external factor is the main factor affecting the government of Indonesia to have failed to achieve target for tax revenues or collection in 2014. The capital outflow, along with the US’ growing economy, have pressured the Indonesian economy.
The slowdown of global economy also impacted on the declining demand over goods produced by Indonesia. The declining prices in commodities, mainly coal and crude palm oil (CPO) last year also hit the Indonesian economy.
Bambang then said the government of Indonesia will focus on the government spending as the stimulus for economic growth this year and implement the flat policy for the government spending on the consumptive segment.