Chatib Basri Comments on Indonesia's Economic Performance in 2013
Indonesia's Finance Minister Chatib Basri expects that Indonesia's economic growth in 2013 will reach 5.7 percent, significantly below the government's initial target of 6.3 percent. Basri announced his expectation at the government's economic evaluation and projection meeting. According to Basri, Indonesia's economic growth is stable, despite its slowing trend. Among the G20 member countries, only China will post higher GDP growth (7.8 percent up to the third quarter). Indonesia's inflation rate is expected to reach 8.5 percent (yoy) at the year-end.
Chatib Basri continued to say that the Indonesia rupiah exchange rate, which has depreciated over 26 percent against the US dollar in 2013 and thus is one of the worst perfoming Asian currencies, will average IDR 10,435 per US dollar this year. The depreciating trend of the rupiah may continue as oil imports remain high while foreign capital outflows from Indonesia's capital markets still happen, caused by the country's ongoing current account deficit (USD $8.4 billion in the third quarter of 2013, or 3.8 percent of GDP) as well as the Federal Reserve's tapering, which will commence in January 2014. The Fed's bond buying program will be reduced from a monthly pace of USD $85 billion to USD $75 billion.
| Source: Bank IndonesiaThe market is also still waiting for the effectiveness of the government's policy packages that were introduced in August and expanded in November 2013. Before a major impact is visible, investors will remain eager to buy US dollars (the world's safe haven).