OECD: Indonesia's growth underpinned by consumption, investment

Reuters, 11.19.09, 05:15 AM EST

PARIS, Nov 19 (Reuters) - Private consumption and a pick-up in investment will drive Indonesia's economy, with annual growth seen above 5 percent in the next two years, the Organisation for Economic Cooperation and Development said on Thursday.

While Indonesia is not a member of the OECD, it is seen as an up-and-coming G20 economy that may soon join the ranks of the BRICs, Brazil, Russia, India, and China, given its large domestic market, rich resources, and growing appeal to investors.

'Domestic demand should continue to be the main driver, supported by a recovery in credit extension and real income gains resulting from ongoing disinflation and falling unemployment,' the OECD said in its semi-annual economic outlook.

'Investment is expected to pick up due to diminishing slack and an improving economic environment.'

The OECD forecast growth would accelerate from 4.5 percent this year to 5.3 percent next, and 5.6 percent in 2011.

Indonesia's government has forecast growth of 4.3 percent this year, and 5.5 percent in 2010.