REPUBLIKA.CO.ID, JAKARTA -- Indonesia's economy is projected to grow 5.5 percent this year or better than last year following structural reforms by the government, stated an official from the Asian Development Bank (ADB).
"We hope that the government can continue its reform efforts through various policies to accelerate infrastructure development, reduce logistics costs, and strengthen budget implementation," ADB's Deputy Regional Director for Indonesia Edimon Ginting noted at an expose here on Tuesday.
He remarked that structural reforms such as reducing fuel subsidy spending and improving the investment atmosphere had offered a good momentum to boost economic development during the next two years.
"This will improve the fiscal conditions and create huge resources that can be allocated to more productive programs, including social and physical infrastructure spending," he emphasized.
Although the government seemed poised to manage the risks, yet several challenges may still pose a threat to the country's economy in the future, especially external challenges such as the continuing economic slowdown in export destination countries and the Fed's plans to increase its interest rate.
Other challenges to be met are internal ones such as the failure to achieve the tax revenue target, which has the potential to widen the budget deficit, reduce infrastructure spending, and growth target, he pointed out.
"Any kind of slowdown in the reform efforts will affect the recovery of private investment. The risk is a bit less due to increasing political support to infrastructure and reform programs implemented by the government," he stated.
The ADB has also forecast that Indonesia's economy in 2016 could grow up to 6.0 percent while the growth assumption set in the revised budget of 2015 was 5.7 percent.
In its latest economic report, the ADB has projected that the Asian region, whose economy will grow 6.3 percent in 2015 and 2016, will contribute significantly to the performance of the global economy.
The Southeast Asian region is forecast to grow 4.9 percent in 2015 and 5.3 percent in 2016 in line with economic recovery in Indonesia and Thailand. Most economies in the region will benefit from the export hike and low inflation, he added.
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