Paying Close Attention to Indonesia

| About: Aberdeen Indonesia (IF)
Indonesia (NYSEMKT:IF) has been one of this year’s top performers. Indonesian President Susilo Bambang Yudhoyono outlined Wednesday his domestic agenda for the next five years, predicting that if re-elected later this year, Indonesia would record 7 percent annual economic growth by 2014.

Analysts are paying close attention to Mr. Yudhoyono’s forecasts because he is widely expected to defeat his two rivals in presidential elections to take place in July. Current polls suggest Mr Yudhoyono, whose Democrat Party won the most votes in April’s parliamentary election, will win comfortably in one round but experts believe his lead will narrow once the formal campaign begins next week.

Indonesia last experienced 7 percent economic growth in 1996, during the era of the dictator Suharto and before the 1997/98 Asian financial crisis. Growth last year was 6.1 percent and 4.4 percent in the first quarter of this year. Analyst forecasts for 2009 range from around 2 percent to 4.5 percent. The Asian Development Bank approved on Wednesday a $1bn standby loan to Indonesia, as the country puts together a $5.5bn package to bolster its ability to navigate the global financial crisis.

The loan came as Bank Indonesia, the central bank, cut its benchmark rate by 25 basis points to a four-year low of 7 percent to stimulate growth after inflation reached a 17-month low of 6.04 percent, year-on-year, in May.

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