YOGYAKARTA - Deputy Bank Indonesia Governor Ardhayadi Mitroadmodjo expects the Indonesian economy to expand 6-6.5 percent in 2011 and 6.1-6.6 percent in 2012 on improving export and investment performance.
Among the sectors that would contribute to the economic growth would be trade, hotel, restaurant and processing industry, he said at a discussion on Bank Indonesia's monetary policy and sustainable regional economic development here on Thursday.
The processing industry was expected to grow amid optimism about high demand in the export and domestic markets, he said.
Yet the rising global commodity prices coupled with strong domestic demand would increase the risk of high inflationary pressure, he said.
As the global economic recovery showed signs of positive developments, the Indonesian economy expanded 6.4 percent in the first quarter of 2011, he said.
"The growth was fueled by investment and exports which grew 10 percent and 8 percent respectively," he said.
The government has projected the national economy to grow 6.4 percent in 2011. Even Vice President Boediono has predicted the Indonesian economy to expand by up to 8 percent this year.
Ardhayadi further said the central bank would always keep watch for high inflation risk by strengthening monetary and macro-prudential policies to keep the inflation rate in check.
One of the steps taken to curb the inflation rate was maintaining the benchmark rate at 6.75 percent at a meeting of the central bank's board of governors on April 12, he said.
Apart from that, he added Bank Indonesia also had extended the holding period of its short-term promissory notes SBI from one month to six months effective May 13, 2011.
"The efforts are aimed at minimizing the negative impact of short-term foreign capital inflows on the monetary stability and financial system," he said.