Indonesia's Export Growth May Beat Government Target, Trade Minister Says

Indonesia is “optimistic” the country can achieve or exceed export growth of 7 percent to 8.5 percent this year, even as Europe’s debt crisis threatens demand for the region’s goods, Trade Minister Mari Pangestu said today.

The increase in exports in the first four months of 2010 suggests the government’s target for the year can be met, Pangestu said in an interview in Ho Chi Minh City, Vietnam today. “We are optimistic that we can achieve the 7 percent to 8.5 percent or even beat it.”

Asia’s rebound is outpacing the rest of the world as companies from Nissan Motor Co. to PT Astra Agro Lestari increase overseas shipments. Still, the recovery may slow as Europe’s debt turmoil hurts consumer and business confidence in advanced economies.

“There is still some downside risk because of what’s happening in Europe,” Pangestu said after speaking at a World Economic Forum conference. “We seem to be so far not seeing any direct effects, but of course we have to be watchful.”

Indonesia’s exports, which account for 26 percent of gross domestic product, rose 19.55 percent in the first quarter from a year earlier. That helped lift revenue at palm oil producers including Astra Agro and PT Perusahaan Perkebunan London Sumatra Indonesia.

While Indonesia isn’t “so exposed” to the European market, with about 12 percent of exports sold to Europe, less than the corresponding figure for China, “you can have secondary effects,” the minister said. “If China’s exports slow down, then so do their imports.”

Indonesia’s economy grew at the fastest pace in more than a year last quarter as record-low interest rates boosted consumer spending and exports and investment recovered. Gross domestic product in Southeast Asia’s largest economy increased 5.7 percent in the three months to March 31 from a year earlier.

Economic growth of 6 percent to 7 percent in the coming years is “pretty much in the pocket,” Gita Wirjawan, chairman of the Investment Coordinating Board of Indonesia, said at the same conference today.

To contact the reporter on this story: Jason Folkmanis in Hanoi at folkmanis@bloomberg.net

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