Indonesia Says Economy May Expand as Much as 6.4%

Indonesia's Finance Minister Agus Martowardojo
Indonesia's Finance Minister Agus Martowardojo attends a hearing on the 2011 budget in Parliament, in Jakarta. Photographer: Dimas Ardian/Bloomberg

Indonesia’s economy may grow 6.1 percent to 6.4 percent next year, supported by domestic consumption and investment, Finance Minister Agus Martowardojo said today.

“We hope growth can be supported by household consumption that stays strong, the improving investment climate and the increase in export activities,” Martowardojo told reporters in Jakarta after a hearing with lawmakers today.

Indonesia’s economy grew at the fastest pace in more than a year last quarter, joining an Asian rebound as the region leads a recovery from last year’s global recession. That momentum may falter as Greece’s near default has prompted governments from Germany to Spain to implement budget cuts to convince investors they can tame deficits, threatening to damp demand.

The crisis in Greece may have the “potential to hinder growth,” Martowardojo said, after central bank Senior Deputy Governor Darmin Nasution said June 2 the European situation had no “direct” impact on Indonesia.

The rupiah slid for the first time in six days today on concern investors will pare holdings of higher-yielding assets after Moody’s Investors Service downgraded Greece’s sovereign rating to junk. The currency traded at 9,170 per dollar at 5:03 p.m. local time.

The rupiah may trade between 9,100 and 9,400 against the dollar next year, Martowardojo said during the hearing. Indonesia’s economic growth and higher interest rates compared with other countries are supporting the rupiah, Nasution told reporters in Jakarta after attending the same meeting today.

Inflation may range between 4.9 percent and 5.3 percent in 2011, the finance minister said. Gross domestic product in Southeast Asia’s largest economy increased 5.7 percent in the three months to March 31 from a year earlier.

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