MANILA, Sept. 27 (UPI) -- The economy of Indonesia, one of the newest members of OPEC, is on the decline, but could recover as policy reforms take hold, the Asian Development Bank said.
The ADB said Tuesday it trimmed its forecast for growth in Indonesia from 5.2 percent to 5 percent. Next year's growth rate should be around 5.1 percent, a decline from the March estimate by the ADB of 5.5 percent.
The bank said it cut its forecast for growth because investment spending was slower than previously expected.
"Despite a challenging environment, Indonesia's economy is still poised to grow at a healthy pace this year," Sona Shrestha, ADB deputy country director for Indonesia, said in a statement. "As the country's policy reforms take hold and the major industrial economies pickup, we are likely to see further economic expansion in the coming year."
The Indonesian government has enacted a series of economic reforms since September 2015, with trade and investment sectors moving toward a deregulated environment. The ADB, which has headquarters in the Philippines, said government spending on infrastructure is expected to rise, but public investments are moving in the opposite direction.
Indonesia last year became a member of the Organization of Petroleum Exporting Countries, though oil production has been waning and the country's focus has largely been on natural gas. A country profile from PricewaterhouseCoopers, however, found that since Indonesia started to steer its gas reserves toward the domestic market in 2006, it dropped from the top exporter of liquefied natural gas to the No. 5 spot, behind Qatar, Malaysia, Australia and Nigeria.
The ADB said the prospects for growth are boosted by the opening of 35 industries to foreign ownership, though labor sector weakness could drag on overall confidence for Indonesia. In June, the World Bank called for monetary policy discretion given the prospects for anemic global economic growth.