Bloomberg News

Indonesia Economy to Maintain ‘Upward Trajectory,’ Minister Says

January 29, 2012

Jan. 29 (Bloomberg) --Indonesia may sustain its economic growth, Trade Minister Gita Wirjawan said, as “fiscal prudence” helps improve the business climate and counter the impact on exports of the European debt crisis.

The nation’s gross domestic product is “likely to stay on the upward trajectory,” Wirjawan said in a Bloomberg TV interview yesterday from Davos, Switzerland. “We’re not yet too much affected by what’s happening in Europe and also in the U.S., because exports only make up 26 percent of GDP unlike some other countries in Asia-Pacific.”

Indonesia may trim debt to less than 20 percent of GDP in the next three years, from 24.5 percent last year, improving the business climate and leading to a higher rating, Wirjawan said. Moody’s Investors Service raised its sovereign rating on Indonesia to an investment grade Baa3 on Jan. 18

The Southeast Asian nation is counting on higher credit ratings to help lure investment. Asian policy makers are shifting focus to shielding growth as Europe’s sovereign woes and a struggling U.S. economy raise the risk of a global recession. Moody’s upgrade was the second in five weeks for Indonesia, after Fitch in December brought the nation back from 14 years of junk ratings.

“Fiscal prudence has yielded very positive results,” Wirjawan said. “It’s quite sensible to think that Indonesia could be in the single-A category in the near foreseeable future,” he said, referring to a rating three levels above Baa3. “That will help improve the business climate.”

--With assistance from Berni Moestafa in Jakarta. Editors: Jim McDonald, Paul Tighe

To contact the reporters on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net; Marta Marino in London at mmarino4@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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