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RI Economy Has Brighter Picture: ADB

From The Jakarta Post
March 25, 2015

Unlike other global financial agencies, the Asian Development Bank (ADB) has painted a more positive picture of the Indonesian economy this year, arguing that the government’s policy reforms will have an impact on economic growth sooner than expected.

The ADB forecast Indonesia to grow by 5.5 and 6 percent respectively this year and 2016, far more optimistic than estimates from the World Bank and the International Monetary Fund (IMF), which said the economy would grow by 5.2 percent this year.

The projections are based on the assumption that the new government’s rapid reform momentum is maintained, especially the acceleration in infrastructure building and budget disbursement.

Edimon Ginting, ADB Indonesia chief economist  said he expected the country’s economic expansion to be more inclusive and to absorb more jobs, given the current administration’s focus on boosting the manufacturing sector.

Currently, every 1 percent of economic growth in Indonesia can absorb approximately 200,000 jobs, according to estimates from the National Development Planning Board (Bappenas).

“In the future, Indonesia should focus on developing its manufacturing industry, which is labor-intensive, with growth in the manufacturing sector closely related to formal employment in the economy,” he added.

In recent years, Indonesia has struggled to maintain its 6-plus percent growth as exports plunged due to weak commodity prices, while investments became moderate due to tight domestic liquidity and infrastructure bottlenecks.

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