UPDATE 1-Indonesia c.bank sees 2010 GDP at top end of fcast

Published: 09 Apr 2010 02:27:45 PST

JAKARTA, April 9 - Indonesia's economy is likely to expand at the upper end of the central bank's 5.5-6.0 percent forecast range this year, senior deputy central bank governor Darmin Nasution said on Friday.

Southeast Asia's biggest economy expanded 4.5 percent last year, making it among few Asian countries to have posted positive growth, thanks to steady domestic demand and a lower dependence on exports.

"We expect the economy to grow by 5.5-6 percent in 2010. It is very likely that it could hit near 6 percent," Nasution told a parliamentary hearing.

He said economic growth was expected to be driven by steady consumer spending, stronger exports amid a global economic recovery and investment.

Finance Minister Sri Mulyani Indrawati said earlier on Friday that growth may hit 5.5-6 percent this year from 4.5 percent last year. The state budget, approved by parliament last year, forecast 5.5 percent growth in 2010.

Nasution also said he expected the rupiah <IDR=> to average 9,000-10,000 to the dollar this year. The rupiah was trading at around 9,035 per dollar on Friday.

The central bank forecast year-end inflation at 4.8 percent this year if the government did not raise electricity prices and at 5.2 percent if it hiked power prices, Nasution said.

Indonesia's annual inflation has been contained below 3.5 percent so far this year, allowing the central bank to keep interest rates at a record low of 6.5 percent for eight consecutive months.

But most analysts expect prices to pick up speed as commodity and energy prices rise, pressing the central bank to raise interest rates by the end of the third quarter.