The World Bank expects Indonesia’s economy to expand 6.2 percent in 2011, less than the official government estimate of 6.4 percent.
World Bank (WB) senior economist for Indonesia Enrique Blanco Armas said Thursday the economic growth target was not considered pessimistic, despite a recent statement by Vice President Boediono that the Indonesian economy could expand by up to 8 percent this year.
“I wouldn’t consider this pessimistic if you see conditions in Europe,” Enrique said at the World Bank office in Jakarta on Thursday.
Last month, the World Bank cut its economic growth estimate for Indonesia to 5.9 percent from 6 percent for full-year 2010, because of domestic-related supply constraint issues caused by weather anomalies that hampered harvests.
Local economists have also said weather anomalies have not only hampered economic growth but caused inflationary pressures mainly from volatile food prices.
The World Bank released its latest global report on Thursday, in which soaring food prices were considered the main focus for domestic consumption-reliant economies such as Indonesia, Southeast Asia’s largest economy with more than 230 million people accounting for 60 percent of its economy.
“Inflation is high or on the rise in many developing countries, notably China, Indonesia and Sri Lanka ... Inflation mainly reflects drought-related increases in food prices,” the report says.
The World Bank sees 2011 headline inflation at 6 percent for Indonesia, in line with the central bank’s 4 to 6 percent target.
“What’s more important is to monitor development in the next few months, most importantly on core inflation. Headline [inflation] increased mostly as a result of high food prices, so it’s weather related. The government should address the supply side,” Armas said. (est)
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