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IMF further cuts Indonesia's growth
Publication Date : 10-10-2012
The International Monetary Fund (IMF) has once again cut its estimate of Indonesia’s economic growth as the global economic slowdown in Europe, the US and China will likely continue to affect the country’s exports.
In a world economic report titled “Coping with High Debt and Sluggish Growth” released yesterday, which coincided with the start of the IMF-World Bank Group annual meetings in Tokyo, the agency lowered its forecast of Indonesia’s gross domestic product (GDP) growth to 6 per cent this year.
In April, the IMF trimmed its estimate of Indonesia’s economic growth rate to 6.1 per cent from its initial forecast of 6.3 per cent.
For next year, the IMF estimates growth of the largest country in Southeast Asia will touch 6.3 per cent, lower than the government’s targets of 6.5 per cent this year and 6.8 per cent next year.
The agency’s report said the growth target was lowered because Indonesia, like other emerging markets, would still be affected by the euro crisis and US fiscal woes. Although the IMF scaled back its estimate of Indonesia’s growth rate, the agency maintained its projection for the Asean-5 region, which consists of Indonesia, Thailand, Malaysia, Philippines and Vietnam, at 5.4 per cent for this year.
“These economies have suffered from the slowdown in the global economy. Some of them are quite connected to China, but on the other hand, they have systems of monetary policy that are relatively easy [...] There also has been a shift toward domestic demand, which is quite robust in the region,” IMF economist Thomas Helbling said after the release of the report.
Although the IMF expects the Asean-5 region to grow by 5.8 per cent next year, the figure is lower than its projection of 6.1 per cent in July.
China is estimated to grow by 7.8 per cent this year and improve to 8.2 per cent next year, lower than previous estimates of 8 per cent and 8.5 per cent, respectively.
In its latest health check on the world economy, the IMF forecast that global output in 2012 would grow by only 3.3 per cent, down from a July estimate of 3.5 per cent, making this the slowest year of growth since 2009. Global output is predicted to experience a modest pickup next year to 3.6 per cent, a downward revision of its July estimate of 3.9 per cent.
“The world economic recovery continues, but it has weakened further. In advanced countries, growth is now too low to make a substantial dent in unemployment,” IMF economic counselor and director of research Oliver Blanchard said.
The US is expected to grow by 2.2 per cent this year and slow to 2.1 per cent next year, while the indebted eurozone economy is predicted to remain sluggish with a minus 0.4 per cent growth rate this year before moving into positive territory to with 0.2 per cent growth next year.