Inflation should be cushioned to support growth: BI
Aditya Suharmoko , The Jakarta Post , Jakarta | Mon, 11/30/2009 5:29 PM | Business
The central bank said Monday that Indonesia 's economic recovery next year would highly depend on authorities' efforts to cushion inflation, which would increase as demand rose.
"For 2010, we need to have an adequate supply so that [increasing] demand will not raise prices," Bank Indonesia (BI) Deputy Governor Hartadi A. Sarwono said after a meeting with the House of Representatives' Commission XI overseeing financial affairs on BI's annual budget.
BI estimated inflation will range between 4 percent and 6 percent in 2010, increasing from a maximum of 3.5 percent this year.
Indonesia 's economy may expand to between 5 percent and 5.5 percent next year, up from about 4 percent predicted for 2009, according to BI.
Bank Danamon Indonesia economist Helmi Arman said there would be no real threat to the economy next year unless the government could not live up to its campaign promises. "After the past six weeks, maybe there's a reason the market should be cautious about its optimism."
He said inflation would rise next year but the impact would not be "malignant" to the economy. "Administered price is controllable.
“There's no urgency to raise prices like in 2005 and 2008," he said, estimating inflation would soar to 6.7 percent in 2010.
