2014 Election to Contribute 0,2% to Growth

Jakarta (Antara) - The 2014 elections may contribute 0.2 percent to Indonesia's economic growth, Standard Chartered Bank senior economist Fauzi Ichsan has predicted. "The 2014 election funds will originate from funds four years ago plus funds until three stages, so the amount of funds will be bigger," he said here on Tuesday. With the additional 0.2 percent growth, the economy may expand by a range of 6.2-6.3 percent, not to mention growth from infrastructures development, he said. "It depends on the amount of election funds, but once again if the economy grows too fast, the current account deficit will widen," he said. However, he added the economic growth should be below six percent so that it will not heavily burden the current account deficit. He said one of the ways to push down the current account deficit is raising the Bank Indonesia benchmark interest rate (BI rate) to make rupiah more attractive to investors. In addition, he added that raising the BI rate may keep the balance between capital inflow and capital outflow which reached US$4 billion over the past few months. "Actually, if the economy grows 5.8 percent-6 percent it will not be bad since the global economic growth is predicted to grow 2.3 percent to 2.4 percent," he said. To achieve capital inflow the rupiah's exchange rate against the dollar must be stable, he said. "If it is stable, fundamental valuations will automatically become relevant to BI ratio in the stock market, and investors will find it easier to calculate yields on state debt securities (SBN) and the inflation rate," he said. (*)