Indonesia’s economic growth is forecast at 6 per cent this year, down from 6.4 per cent predicted earlier, in line with a slowing of the country’s exports sparked by a world economic slowdown, the World Bank said on Tuesday…

However, it predicted Indonesia’s economy growth would rise to 6.4 per cent in 2009…

Despite the slowing global economy, in 2007 Indonesia’s economic growth accelerated to a 10-year high of 6.3 per cent, the World Bank said.

“This growth rate reduced (Indonesia’s) poverty rate from 17.8 per cent (in 2006) to 16.6 per cent (in 2007), based on the government’s poverty line,” it said.

The growth rate also reversed the recent trend toward jobless growth by causing unemployment to fall from 10.3 per cent to 9.1 per cent.

This is good news; and it is from the World Bank, which often offers gloomy prediction of Indonesia’s economic growth.

I am not a macroeconomist, but I am willing to bet that the economy this year will grow faster than 6 percent, maybe close to last year’s growth rate of 6.3 percent.

Indonesia’s economic growth (2002-2007)

Indonesia’s economy as a whole grows by 6.3%, which is also quite good. But, the slower growth is because oil and gas sectors continue contracting.

If this seven percent growth translates into lower unemployment- and poverty rates, all would be very well.

Economic Growth Rates

From Takatoshi Ito’s paper on Asian Crisis; via Dani Rodrik’s weblog.

The average forecast of first quarter growth by a Dow Jones Newswires poll of 12 regional economists is 5.75 percent. The economy actually grows by 6 percent. On average, they miss the target by about 25 percentage points.

So, will all the glooms go away? Maybe not yet. As the good news about Indonesia’s economy continues flowing, however, the forecasters would have to eventually turn about face.

I mean, it would embarrassing for them to consistently underestimate the strength of Indonesia’s economy, right?

Not an impossible goal, to say the least.

Indonesia’s GDP per Capita

More likely though, Indonesia’s economy would grow by about five percent per year so that GDP per capita PPP at constant 2000 international $ in 2030 will be about $12,000 (the red dotted line).

That would be quite excellent in itself, though, of course, the government could “easily” increase economic growth further.

Such as, by shredding some paper forms and closing some offices.

Jakarta Post reports:

The government sees economic growth of 6.8 percent in 2008, with inflation between 5.6 and 6 percent, the coordinating minister for the economy [Boediono] said Monday…

Boediono said the economy has improved since the second and third quarters of last year, and the government had put into place policies to further push the economy.

With more relaxed monetary policies, effective fiscal management and an improved investment climate, he said the growth target could be achieved.

“We have to be optimistic. There’s no reason to be pessimistic,” he said.