Aditya Suharmoko, The Jakarta Post, Jakarta|Fri, 05/29/2009 11:50 AM|Headlines

The economy will expand 4.3 percent this year, higher than what multilateral agencies estimated, giving the country a chance to gain world recognition for its cushioning of the crisis impact, a minister says.

“It is highly likely the country will record an economic growth of above 4 percent this year,” Finance Minister Sri Mulyani Indrawati said in an interview Thursday.

“This beats many parties’ predictions that have been pessimistic about Indonesia.”

The International Monetary Fund (IMF) forecast Indonesia’s economy would grow 2.5 percent this year, while the Asian Development Bank (ADB) predicted a 3.6 percent growth. The government, meanwhile, insists the economy can expand between 4 percent and 4.5 percent in 2009.

“This momentum puts Indonesia in a respectable position as China may score a 6.5 percent growth, followed by a 5 percent growth in India and a 4.3 percent growth in Indonesia. So it is very close, and *the growth* looks very high compared to that in many other countries.”

Indonesia’s economic resilience has made global investment firm Morgan Stanley revise its forecast of Indonesia’s economic growth upward, from 1.9 percent to 3.7 percent, the firm’s economist Deyi Tan said in a report Wednesday, as reported by Bloomberg.

The economy grew 4.4 percent in the first quarter of 2009 from a year earlier, according to the Central Statistics Agency (BPS), as private consumption remained buoyant, offsetting weak exports and investment performance.

Government spending also helped as officials procured goods for the preparation of the legislative elections, which took place in April, said Mulyani.

She is optimistic Indonesia can maintain this momentum throughout the remaining three quarters due to the recent global economic situation – and certain indicators, particularly exports – suggesting the worst of the crisis may have passed.

Mulyani is certain exports, which plunged by around 30 percent in the first three-month period this year from a year earlier, would improve in line with a gradual recovery of the world’s economy.

“Private consumption accounts for 60 percent of our gross domestic product *GDP*; if it goes down even a little bit, it will be reflected in the *economic* growth. What will compensate this is exports,” she said.

“Japan, where exports have dropped by 60 percent, and other countries, where economies have also experienced dramatic drops, have seen signs of bottoming out. This creates hope that the idea of boosting private consumption helps improve the economy,” she added.

Government spending will also continue as some ministries – particularly those with big budget allocations like the Public Works Ministry, the Education Ministry, the Transportations Ministry, the Religious Affairs Ministry and the Agriculture Ministry – have started their procurement process for development projects.