Jakarta - Indonesia's economic growth is forecast at 6 per cent this year, down from 6.4 per cent predicted earlier, in line with a slowing of the country's exports sparked by a world economic slowdown, the World Bank said on Tuesday. The World Bank said in its latest report that Indonesia's export growth was expected to slow from 8 per cent in 2007 to 7 per cent this year.
However, it predicted Indonesia's economy growth would rise to 6.4 per cent in 2009.
"Domestic demand, especially investment and consumption, should also remain robust as the economy's momentum carries into 2008," the World Bank said.
With the higher international fuel prices and subsidies, the budget deficit is projected to widen to over 2 per cent of GDP with the debt-to-GDP ratio falling further to 31 per cent by the end of 2008, it said
"The slowdown in the world economy and increasing risks make projecting outcomes for 2008 and 2009 more difficult than usual," it said. "Indonesia is expected to weather the global slowdown reasonably well, with growth slowing to 6.0 per cent in 2008 before returning to 6.4 per cent in 2009.
Despite the slowing global economy, in 2007 Indonesia's economic growth accelerated to a 10-year high of 6.3 per cent, the World Bank said.
"This growth rate reduced (Indonesia's) poverty rate from 17.8 per cent (in 2006) to 16.6 per cent (in 2007), based on the government's poverty line," it said.
The growth rate also reversed the recent trend toward jobless growth by causing unemployment to fall from 10.3 per cent to 9.1 per cent.
During the first half of 2007, the economy drew strength from external demand while in the second half, the driving force was investment coupled with consumer demand, it said.
Investment picked up substantially in the year, reaching 24.8 per cent of GDP.
