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Indonesia Raises 2012 GDP Growth Forecast to as Much as 7%

July 5 (Bloomberg) -- Indonesia’s government raised its forecast for the economy’s expansion next year on rising exports and investments.

Gross domestic product may increase as much as 7 percent next year, Melchias Mekeng, head of the parliament’s budget committee, said today after deliberations were completed. That compares with a projection of as much as 6.9 percent in May. Consumer prices may rise 4 percent to 5.3 percent in 2012, compared with an earlier range of 3.5 percent to 5.5 percent, he said.

Indonesia is one step away from its first investment-grade credit rating in more than a decade as President Susilo Bambang Yudhoyono targets growth of as much as 6.6 percent on average through the remainder of his term ending in 2014. He plans to double spending on roads, ports and airports to $140 billion by then after inadequate infrastructure hampered growth.

“Indonesia’s rating may reach investment grade by 2012 and several infrastructure projects are expected to start next year,” Finance Minister Agus Martowardojo said in Jakarta today after meeting lawmakers.

The 2012 budget deficit may reach as much as 1.9 percent of GDP, Mekeng said. The budget shortfall may be 2.1 percent of GDP in 2011, Vice Finance Minister Anny Ratnawati said June 28.

The rupiah has gained more than 5 percent in 2011, the second-best performing currency in Asia excluding Japan, as the region’s growth lures funds seeking higher returns. The rupiah may average 8,600 to 9,100 per dollar next year, Mekeng said.

To contact the reporter on this story: Widya Utami at wutami@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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