BI: ECONOMY MAY GROW ABOVE FOUR PERCENT

Jakarta, June 30 (ANTARA) - Bank Indonesia )BI) Deputy Governor Hartadi A Sarwono said it was possible for the country's economy to grow above 4.0 percent if the US and Europe recovered.

"It is not impossible for it to happen. It depends on the speed of global recovery. It is possible for the economy to grow above four percent. However, it is still too early for me to say that the US and the Eurpean economies will soon improve," he said.

He said Bank Indonesia would not revise its forecast. The central bank still predicts the economy will grow between 3.5 and 4.0 percent.

He predicted that BI inclined to the 4.0 percent growth forecast because of signs of improving regional economic conditions.

"Signs of improvement are already seen in the region. China, India and South Korea are already improving. Even the regions are now supporting growth," he said.

Sarwono said the country's current economic growth was still supported by public consumption and therefore it was not surprising that consumption credits were growing high.

Regarding inflation he said BI believed it would be around five percent in 2009.

In June it was below four percent year-on-year. Inflation weakened in line with declining world economic growth, he said.

He said Bank Indonesia predicted the rupiah exchange rate would continue to strengthen.

The rupiah exchange rate would be at an average Rp10,500 - Rp11,000 a year against the US dollar. He said until June the average rate was Rp11.055 per US dollar.

Regarding the three-month interest of Bank Indonesia Certificates (SBI), Sarwono predicted that it would continue to drop to reach between 7.25 and 7.75 percent by the end of the year.

In June Bank Indonesia recorded the auction rate of the three-month SBI at 8.7 percent.

He said the drop occurred because a room was available for it as inflationary pressure had declined and bank liquidity was improving.

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