Indonesian Coordinating Minister for Economy Hatta Rajasa said on Thursday that the government forecast economy to accelerate at 6.9 percent to 7 percent this year, as investment and exports pick up.
The new target was made as more foreign investment has flowed into the country and global demand of commodity products, which have been the main of Indonesia's export products, has risen.
"About our economic growth, I say that it not impossible that it (economic growth) can be at 6.9 percent and 7 percent (in 2011), " the minister told reporters at the State Palace.
Minister Rajasa said that the good outlook of inflation and rise of government spending were expected to contribute on the economic growth rise.
Indonesia's inflation has eased for the third straight months on April to 6.16 percent, year on year, after reaching 6.65 percent in March, food supply improved, the National Statistic Agency reported on May 2. The central bank has set a target of inflation at 4 percent to 6 percent this year.
Indonesia targets investment to grow by 15 percent this year, according to the country's investment coordinating board. Export is forecast to grow at 12 percent in 2011, Minister rajasa has said.
"Our inflation has been well managed and the purchasing power remain high," said Rajasa.
But, the minister said that there were still some problems that must be addressed, including infrastructure facilities and slow of acceleration of budget spending.
Indonesian central bank has refrained from raising its basic rate for the third straight month on May 12 since it rose it by 25 basis points to 6.75 percent on Feb.4, aiming at spurring growth as inflation eased.
The bank relies on rupiah appreciation to curb imported inflation, but recently it has monitored the currency strengthening in order to make it not move too far.
Accelerating growth at the moderate level, sound fundamentals amid expectation to investment grade have pushed seeking-higher- yield at advanced nations imposing nearly-to-zero interest rate to flow into Indonesia.