IMF cuts Indonesia's growth estimation

JAKARTA - The International Monetary Fund (IMF) has once again cut its estimation of Indonesia's economic growth as the global economic slowdown in Europe, the US and China will likely continue to affect the country's exports, local media reported on Wednesday.

In a world economic report titled "Coping with High Debt and Sluggish Growth" released on Tuesday, the agency lowered its forecast of Indonesia's gross domestic product (GDP) growth to 6 percent this year.

In April, the IMF trimmed its estimation of Indonesia's economic growth rate to 6.1 percent from its initial forecast of 6.3 percent.

For next year, the IMF estimates growth of the largest country in Southeast Asia will touch 6.3 percent, lower than the government's targets of 6.5 percent this year and 6.8 percent next year.

The agency's report said the growth target was lowered because Indonesia, like other emerging markets, would still be affected by the euro crisis and US fiscal woes.

Although the IMF scaled back its estimate of Indonesia's growth rate, the agency maintained its projection for the ASEAN-5 region, which consists of Indonesia, Thailand, Malaysia, the Philippines and Vietnam, at 5.4 percent for this year.

"These economies have suffered from the slowdown in the global economy. Some of them are quite connected to China, but on the other hand, they have systems of monetary policy that are relatively easy. There also has been a shift toward domestic demand, which is quite robust in the region," IMF economist Thomas Helbling said.

Although the IMF expects the ASEAN-5 region to grow by 5.8 percent next year, the figure is lower than its projection of 6.1 percent in July.

China is estimated to grow by 7.8 percent this year and improve to 8.2 percent next year, lower than previous estimates of 8 percent and 8.5 percent, respectively.

In its latest health check on the world economy, the IMF forecast that global output in 2012 would grow by only 3.3 percent, down from a July estimate of 3.5 percent, making this the slowest year of growth since 2009. Global output is predicted to experience a modest pickup next year to 3.6 percent, a downward revision of its July estimate of 3.9 percent, the Jakarta Post reported.

"The world economic recovery continues, but it has weakened further. In advanced countries, growth is now too low to make a substantial dent in unemployment," IMF economic counselor and director of research Oliver Blanchard said.

The US is expected to grow by 2.2 percent this year and slow to 2.1 percent next year, while the indebted eurozone economy is predicted to remain sluggish with a minus 0.4 percent growth rate this year before moving into positive territory to with 0.2 percent growth next year.