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Asian Development Bank: Indonesia economy to grow 6.4% this year

Manila-based Asian Development Bank (ADB) forecasts Indonesia’s economy to moderate this year before accelerating again next year on improved public investment in infrastructure, better capital spending and closing development gaps.

The ADB saw the country’s economy to slightly slow to 6.4 percent in 2012 from 6.5 percent last year on weaker external demand. That compares with the government’s 6.7 percent economic growth target this year, which the ADB said might likely be achieved next year due to an expected trade recovery and improvements in the investment climate.

“The forecast assumes that the government will raise public investment in infrastructure, reducing bottlenecks such as weak budget execution for capital spending, and closing the development gap between eastern and western regions of the country,” ADB said in a press statement on Wednesday after a release of its flagship annual economic publication.

Lagging development of infrastructure, especially in the transportation and energy sectors, continues to be a major constraint to economic growth, according to the report. However, weakness in the external economic environment in 2012 may provide an incentive for infrastructure development to support growth in the near term.

“Although there is a weak global environment, Southeast Asia’s growth momentum continues. Indonesia is generally adjusting toward a more sustained, long-term growth,” said Jon D. Lindborg, ADB’s country director for Indonesia.

Source : www.thejakartapost.com