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Indonesia will see higher Q3 growth even as fuel prices rise, Minister says According to Reuters



© Reuters. A technician stands on a crane at Tanjung Priok port in Jakarta, Indonesia, August 3, 2022. REUTERS / Willy Kurniawan

JAKARTA (Reuters) – Indonesia’s economic growth this quarter is expected to be higher than the 5.44% rate in the second quarter, even as fuel prices are likely to rise, a senior cabinet minister said on Thursday. Tuesday.

Southeast Asia’s largest economy is considering raising prices of some fuels to rein in a ballooning energy subsidy budget, a move that could drive up daily costs for businesses and consumers. and cause inflation.

“We still see that GDP growth this quarter may be better than last quarter,” Luhut Pandjaitan said at an economic conference organized by the Association of Indonesian Employers (Apindo). He said higher private spending as the country recovers from the COVID-19 pandemic will still drive growth.

Amid rising fuel price expectations, Indonesia’s Finance Minister on Monday announced that the government will reallocate 24.1 trillion rupiah of fuel subsidies to social spending.

Lawmakers from the parliament’s energy committee last week told Reuters the government could raise fuel prices by 30% to 40% and that such a move would add 1.9 percentage points to the rate. inflation this year.

Indonesians are currently paying 7,650 rupiah per liter (about 51 US cents) for their most popular gasoline product, which authorities say is about 40% below the estimated market price, while diesel is being sold. Subsidies are sold for 5,150 rupiah (about 35 US cents) per liter, about a third of the market price.

At the same event on Tuesday, Industry Minister Agus Gumiwang Kartasasmita said he believes the petrol price adjustment will not significantly affect the production costs of medium to large scale industries, but he said an increase in the price of diesel fuel could cause a 10% to 15% increase in the price of some goods.

(1 dollar = 14,86600 rupiah)



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