Tuesday, May 6, 2008
Domestic Inflation Estimated to be Down in Second Quarter of 2008
Source: Antara News

Jakarta - President Director of PT Danareksa Investment Management Priyo Santoso has estimated that the country's inflation rate, which currently tended to increase, would be down in the 2008 second quarter thanks to improving US economic indicators.

"With the improvement of the US economy, inflation rate in various countries in Asia, Europe and America, will be moving downward, because the global economy is moving to a positive direction," he said here on Tuesday.

The Asian region, especially Indonesia, was very worried about the condition of the US economic growth because the US was a potential market for its export products, he said.

However, a number of US economic indicators which had showed signs of improvement, gave a hope that the US economic continued to grow following the US sub-prime mortgage crisis

Among the improving US economic indicators was the U.S. service sector which showed a better-than-expected reading of 52 for April, up from 49.6 in March. Besides, a number of US oil and mining companies were also recording a better growth, he said.

However, a number of business players were still waiting for further data on the US economy to see whether the US crisis was really over, he said.

Meanwhile, Indonesia continued to deal with its problems by among other things planning to raise fuel prices in June 2008, he said.

The rocketing world's crude oil price surge to above 120 US dollars cause Indonesia's budget deficit to increase significantly, he said.

The government asked the people to understand the government's plan to raise the fuel prices next June in order cut the budget deficit.

On the Bank Indonesia (BI) key rate, he said the central bank was estimated to maintain its key rate, known as BI Rate, because the April inflation rate tended to get lower to around 0.59 percent from 0.95 percent previously.