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Indonesia raised its growth target to as much as 7 percent next year over optimism that inflation would be kept at bay and that its master plan for development would boost the economy.

The Finance Ministry forecast economic growth at a range of 6.6 percent to 7 percent in 2012, compared with an earlier projection of 6.5 percent to 6.9 percent.

“Indonesia has the potential,” Agus Martowardojo, the ministry’s chief, said during a meeting with the House of Representatives’ Commission XI overseeing finance on Tuesday.

“If Indonesia is able to complete its infrastructure development projects, it will drive up [the country’s] investment grade so the target range is acceptable,” the minister added.

The ministry considered several factors in its latest projection, including the assumption that the inflation rate would be at 4- 5.3 percent next year.

Government data showed that inflation slowed last month, with the consumer price index at a 5.54 percent annualized rate in June, compared to 5.98 percent in May.

The ministry also expected greater development in the regions under the Rp 4,000 trillion ($468 billion) Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3E1). Part of the plan involves the creation of economic corridors, spanning industries from agriculture to telecommunication, across the nation.

The ministry kept its forecast on economic growth this year at 6.5 percent, after the economy expanded to 6.1 percent last year.

The ministry also predicted that the rupiah would move between 8,600 and 9,100 against the dollar next year and that the price of crude oil would be between $75 and $95 per barrel.

The rupiah traded at 8,535 against the dollar on Tuesday, while crude oil for August delivery traded at $95.05 a barrel in New York.

Antara