WB Revises Down Its Prediction Of Indonesia's Growth

Jakarta, July 2 (Antara) - The World Bank (WB) has revised down its prediction of Indonesia`s economic growth to 5.9 percent from 6.2 percent previously. The revision followed the downtrend recorded in domestic consumption and exports as the main drivers of the country`s economic growth so far. "There is still turbulence expected until the end of the year on slowdown in the growth of domestic demand and continued pressure on the commodity prices and export earning," World Bank`s economist Ndiame Diop said here on Tuesday. Ndiame said Indonesia needs to make adjustments to the economic pressure such as slowdown in first quarter growth and the planned cut in Quantitative Easing by the Fed , to keep macro economic stability. "Flexible but predictable macro economic policy will help Indonesia to go through the period of uncertainty," he said. He said loss of consumer confidence following the increase in the prices of subsidized oil fuels that triggered high inflation resulted in vulnerable economic prospects and slowdown in investment. Correction in the share prices lately also add to discouraging prospects of the economy in 2013, he said. He said the increase in the prices of subsidized oil fuels will help cut the deficit in 2013 state budget by Rp42 trillion and allow an increase in social aid program. "Compensation for the poor will help cut poverty , which is projected at 9.4 percent in March 2014," he said. He said although the Indonesian economy is predicted to grow in 2014, there is still risk of stronger slowdown because of continued fall in commodity prices. Sharper decline in commodity prices would be a big risk to the country`s export earning, business profitability and investment, he said. Currently , the prices of the country`s main commodities have declined by at least 20 percent after the peak in 2011.