Indonesia's central bank sees economic growth well below Jokowi's 2019 target

[JAKARTA] Indonesia's central bank is forecasting the economy to grow as much as 6 per cent in 2016, and expects a moderate pick up over the next four years - well below President Joko Widodo's growth target which analysts see as overly optimistic.

Bank Indonesia's (BI) latest economic report, which was embargoed for release on Wednesday, also predicted growth at 6.5 per cent in 2019, a fair distance from Jokowi's ambitious 7.7-8.3 per cent goal. "The government assumes growth at 7 per cent with all government projects working 100 per cent. At Bank Indonesia, we take a different approach at seeing whether or not projects can be realised," said Solihin Juhro, BI's director for monetary policy at the launch of the economic report on Tuesday.

Jokowi, who took office in October last year, pledged to boost gross domestic product (GDP) growth to 7 per cent on average during his term which ends in 2019.

Analysts have expressed scepticism about the growth target, noting a notoriously slow bureaucracy, supply bottlenecks and limited transportation as major challenges.

The president is counting on foreign investment to provide momentum, and has promised to cut red tape and fix creaking infrastructure that have hobbled Southeast Asia's biggest economy.

Last year the economy grew 5.02 per cent, the slowest pace in five years, which BI's Juhro blamed on a soft global economy and plunging commodity prices.

Growth is expected to rebound closer to the lower-end of 5.4-5.8 per cent this year, the central bank said, with a pick up to 5.6-6.0 per cent pencilled in for 2016.

Meanwhile, Indonesia's Planning Minister Andrinof Chaniago took a more optimistic view. Earlier Wednesday, the minister said he sees economic growth at 6.4-6.6 per cent for next year.

The central bank reiterated its expectations for the economy to grow a modest 5 per cent in the first quarter of this year with a downside risk due to persistent weakness in foreign investment.

The statistics bureau is expected to announce Indonesia's GDP next month.

REUTERS