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Indonesian economic growth expected to exceed 6% in Q3

09-06-2010 16:55 BJT

JAKARTA, Sept. 6 (Xinhua) -- Indonesia's economy in the third quarter of this year is targeted to accelerate to more than 6 percent as the consumption, government spending and investment pick up, a minister said on Monday.

Indonesian Coordinating Minister for Economy Hatta Rajasa said that consumption and the government spending has been risen since July from that of at the second quarter and the investment as well.

"I think the growth in the third quarter is more than 6 percent, that is my forecast," he said at the Coordinating Ministry for Economy.

The government spending regularly starts rising at the third quarter.

Indonesia's economy accelerate at 5.7 percent in the first quarter and 6.2 percent in the second quarter. The government forecasts the GDP will accelerate at 6 percent this year.

The Indonesian central bank on Sept. 3 refrained from joining regional central banks to raise rate and kept it at 6.5 percent as Indonesian President Susilo Bambang Yudhoyono target an average of 6.6 percent growth at the reminder of his term ending at 2014.

Indonesia, with a population of over 238 million, relies much on consumption to spur growth.

Rebound of exports and investment also contributes on the growth.

"The people's spending on consumption can be maintained," said Rajasa.

Indonesian central bank on Sept. 3 asked lenders to boost primary reserve requirement to 8 percent from 5 percent to contain inflation.

The statistic Bureau announced on Sept. 1 that the inflation rate recorded at 16 months high to 6.44 percent in August, due to Muslims in the country observe Islamic holy month of Ramadhan and prepare for Islamic festivity.

Electricity prices hike also strengthened pressure on inflation.

The central bank has predicted that the inflation will exceed 6 percent at the year end.

Strong fundamentals, relatively stable political condition, modest growth and expectation to jump to investment grade by most of rating agencies have lured global investors to come into Indonesia.

The government plans to rise capital spending by 28 percent to 121.7 trillion rupiah (some 13.56 billion U.S. dolalrs) next year to build road, bridge and airports, and expand deficit to 1.7 percent in 2011 from 1.5 percent this year.

The government also plans to reduce subsidy.

Editor:Xiong Qu |Source: Xinhua

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