REPUBLIKA.CO.ID, JAKARTA - Minister of Finance M Chatib Basri said that economic growth was expected to slow down this year as the effects of government policies to stabilize the current account balance which still recorded deficit. He said if government wanted to stabilize current account deficit, its effect was slower growth of economy.

"Government estimates that economic growth will be at 5.9 percent this year," Basri said recently.

Basri praised the measure taken by Bank Indonesia to increase its benchmark interest rate by 50 basis points to seven percent as parts of government's efforts to reduce current account deficit. However, BI rate hike will affect credit growth which then impacts on weakening investment. Currently investment still becomes major component of economic growth.

Basri also said that the decline in investment would affect real sectors, so the unemployment rates was expected to increase. Hence, Government will continue to guide and gives direction to business community on package of measures that have been published to be more effective. 

Government is currently working on making ongoing structural reforms and implementation of economic policy package with maximum capacity. It is worried that market investors get the wrong sign that Indonesia does not undertake structural reforms. 

"Hopefully they don't think that way," Basri said. 

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