Political stability will maintain Indonesia's economic growth momentum

Political stability will maintain Indonesia's economic growth momentum.

Political stability and more private investment are among factors that can maintain the country's momentum for future economic growth, an analyst has said.

Mandiri Sekuritas chief economist Leo Putra Rinaldy said the country had managed to maintain political stability following the Golkar Party's decision to support President Joko "Jokowi" Widodo's administration in July.

"Economic and investment stability will be solid only if a country has political stability. Currently, 70 percent of our House of Representatives members support Jokowi. Before Golkar threw in its support, it was only 40 percent," he said, Friday.

Leo further explained the nation's political condition was now more stable as seven parties were now supporting Jokowi's administration.

He also said Sri Mulyani's decision to conduct a second budget cut in August had created lower fiscal risks. The decision had not only led to lower inflation and a stable rupiah but also would serve as a strong platform for private investment to improve, he went on.

Mandiri Sekuritas has forecast the economy to grow by 5 percent this year, slightly better than the previous year, in which it only grew 4.8 percent. The country's economy will continue to improve next year within the range of 5.1 to 5.2 percent, the securities company further says.

Leo said the rupiah's exchange rate would also continue to strengthen to Rp 13,100 per US dollar this year, and around Rp 12,800 to 13,000 per dollar next year. "In my opinion, the rupiah has experienced the biggest jump compared to other currencies, reaching 6 percent," said the economist, who also applauded the successful efforts of the government and Bank Indonesia in managing inflation. (ebf)