Indonesia Inflation to Reach 4.5%

The International Monetary Fund has forecast that the inflation rate in Indonesia could reach 4.5% this year owing to an electricity subsidy cut and recovery in commodity prices. In a statement quoted by Antara on Saturday, the IMF concluded that despite a hike in inflation, other economic indicators in Indonesia showed an improvement, driven by a combination of prudent macroeconomic policies and sustainable structural reforms. “The near-term outlook is still good. The economy is expected to grow moderately at 5.1% in 2017, while the rate of inflation will increase to around 4.5% by the end of 2017,” it said. Indonesia’s economic growth in 2017 would be supported by a stage-wise increase in private investment following improving commodity prices and a low interest rate and a recovery in overseas demand for goods due to improvements in global trade conditions. IMF has forecast that Indonesia’s current account, which is another economic indicator that records the transactions of goods and services between Indonesian and foreign citizens, will suffer a deficit of 2% of GDP.