Economy and politics will run separately: Economist

Jakarta (ANTARA News) - Head Economist of Danamon Bank, Anton Hendranata, believed that the Indonesian economy would not be affected by the political condition throughout this year and the next year, as each sector will run separately.

"My hypothesis is that the economy sector will go on its own and the same would apply to the political sector, which means that they are not connected to each other. Certainly, the members of political parties would not want to see the economy fall," he stated in Jakarta on Wednesday.

He believed that the government should focus on maintaining the momentum for economic improvement, which had shown an increase in the third quarter of 2017 and can continue through to 2018.

"Hopefully, this momentum can be maintained. I predicted the fourth quarter to be the same as the second one. In 2018, it will continue to increase, although the political tension in the country would also increase," he stated.

Indonesias economic growth, since 2014, had not moved from the 5 percent mark. In 2014, the growth went up to 5.01 percent and fell to 4.88 percent in 2015. In 2016, it experienced another increase to 5.02 percent.

Meanwhile, in the first and second quarter of 2017, economic growth rate went to 5.01 percent and went up again in the third quarter to 5.06 percent.

Hendranata predicted the economic growth to reach 5.04 percent throughout 2017.

Hendranata predicted the economic growth to reach 5.27 percent in 2018, which is slightly lower compared to the target stated in the state budget, which is 5.4 percent.

"The 2018 regional elections, Legislative and General elections in 2019; the IMF-World Bank Meeting; and the Asian Games will help boost economic growth and enable it to reach higher numbers compared to last year.

When it comes to the exchange rate of rupiah, he predicted that the rate against the US dollar will reach Rp13,575 per US dollar, which is weaker than the assumption in the 2018 State Budget, with Rp13,400 per US dollar.

As for inflation, he also predicted the rate to reach 3.64 percent, higher than the 3.5 percent state budget assumption.

"Inflation will remain under control, keeping in mind that it is without any rise in administered prices," he revealed.

In addition, Bank Indonesias benchmark interest rate, or BI 7-day Reverse Repo Rate, will remain at 4.25 percent until the end of the year.

However, the government must also be cautious, should the US Federal Reserves rate rise and the Fed reduces its assets aggressively.

Source: ANTARA News

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