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Indonesian GDP growth should outpace government predictions in 2010 and the stock market is likely to be the top performer in Southeast Asia, say analysts and economists.

However, they also warned that the huge amount of debt being racked up in some developed countries to pay for economic stimulus packages could be a source of global economic turbulence next year.

The consensus among the various arms of government is that Indonesia’s economy will grow by 5 percent to 5.5 percent next year.

However, Winang Budoyo, chief economist at PT CIMB Niaga Bank, predicted growth of 5.8 percent next year, saying the economy could grow amid a global slowdown because of domestic demand. “Potentially, Indonesia faces 6 to 7 percent of economic growth from 2011 onwards,” Winang said.

Danareksa Research Institute economist Purbaya Yudhi Sadewa was slightly more optimistic, predicting GDP growth of 6 percent next year. Exports should rise by 11 percent to 12 percent and investment will see double-digit growth, he said.

“This year is one of low-base growth for the economy, but next year the engine of growth could be more balanced,” Purbaya said.

Analysts were bullish on the stock market. PT CIMB Securities predicted that the Jakarta Composite Index would be the top performer among Southeast Asian markets in 2010, due to stronger economic growth, earnings growth and the undervaluation of many Indonesian companies.

CIMB regional equity strategist Chang Chiou Yi said she expected the JCI to gain nearly 20 percent next year, to 2,950 points by the end of the year.

By comparison, she said the Singapore and Thai indexes would both gain about 14 percent and Malaysia’s index about 10 percent. “On a relative basis, the JCI has become more expensive compared to the Thai market in particular, but the latter continues to see persisting political concerns,” she said, referring to valuations.

Independent capital markets analyst Rizal B Prasetijo also expected the JCI to enjoy a good run next year, predicting it would reach 3,000 points, with a price-to-earnings ratio of 14 to 15.

Winang said rising interest in Indonesia among foreign investors had been sparked by the country’s strong economic growth this year.

Increasing foreign-exchange reserves would also make Indonesia attractive to offshore investors next year, he said.

The nation’s forex reserves peaked in October at $64.5 billion and are expected to reach $75 billion next year, he said.

However, Poltak Holtadero, head of research at PT Recapital Sekuritas, cautioned that the stock market would experience high volatility in 2010.

“The market turbulence might happen in the middle of next year along with global interest rate hikes,” he said.

Global liquidity concerns may emerge due to the indebtedness of some developed countries who have spent large sums on economic stimulus packages, Poltak said.