Economic forecast.

The article presents economic forecast for Indonesia for 2005-06. Real GDP growth in the first half of 2005, at almost 6% year on year, was surprisingly strong, given the devastation caused by the tsunami in late 2004 and rising expectations of interest rate and fuel price rises. Growth in consumer demand is still expected to slow in 2005, largely as a result of higher inflation. The government is prioritizing infrastructure development, and there are signs that efforts to improve the business environment are already having an impact. Consumer price inflation has fallen rapidly since it spiked at a year-on-year rate of 8.8% in March 2005, following a 29% increase in fuel prices on March 1, 2005.