REPUBLIKA.CO.ID, BANDUNG -- Standard Chartered Bank (SCB) has predicted that the country's economic growth in 2015 will increase to 5.8 percent, as compared to 2014.
"We are confident that Indonesia's economic growth will increase to 5.8 percent next year from this year's prediction of 5.5 percent in the first semester," SCB chief economist Eric Sugandi said.
He added that in 2015, the current account would be smaller because of Bank Indonesia (BI/the central bank) pressure and would have an impact on economic growth in the country.
Apart from that, in 2015 there would no longer be uncertainties following the presidential elections.
"The relations between the executive and the legislative branches of the state are predicted to run well," he added.
He stated that the challenge in the first semester of 2014 included the efforts to boost real gross domestic product (GDP) growth, which was 5.5 percent.
Eric stated that if the government did not raise the price of subsidized fuel oil in 2014, the inflation rate could reach 5 percent by the end of the year.
"However, if the government raises it, the inflation rate could increase to 8 percent," he stated.
Eric recalled that each time the subsidized fuel price was increased, the government would bear a political cost. Further, the increase in the subsidized fuel price would raise the BI key interest rate.
The BI rate is expected to remain at 7.5 percent until the end of the year, while the rupiah exchange rate is predicted to reach Rp11.600 per US dollar by the end of 2014.
In the meantime, Finance Minister Chatib Basri said last month that the government would revise downwards the assumed economic growth rate in the draft revision of the 2014 state budget to 5.5 percent, from 6.0 percent.
"The growth forecast is 5.5 percent in 2014, considering that the first-quarter growth is 5.2 percent," he said here on Tuesday.
The economic growth is expected to start increasing in the second quarter, fueled by an improving export performance after the Indonesian economy contracted earlier this year, he added.
"We hope our exports will increase in the second quarter, after falling sharply in the first quarter. Hopefully, our exports will recover, while the other will remain more or less the same," he said.
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