Indonesian Finance Minister Muhamad Chatib Basri believes his country will remain the second-fastest-growing economy in the Asia region, despite having to lift interest rates to curb a ballooning current account deficit.
Indonesia - labelled one of the "fragile five" along with Brazil, India, South Africa and Turkey - was hit during emerging-market volatility in mid-2013 when the US Federal Reserve first indicated it was going to end its stimulatory bond-buying program.
These countries were seen as most vulnerable to the Fed withdrawing liquidity, also known as tapering, because of their reliance on foreign funding.
The Fed began reducing its bond buying in late 2013.
Dr Basri told a conference in Canberra on Thursday that Indonesia quickly stopped being a darling of international investors after the first signs that tapering would begin.
However, he expected the Indonesian economy would grow at 5.8 per cent, perhaps as much as six per cent, in 2014 despite higher interest rates.
Dr Basri also said Indonesia's central bank had just announced "the good news" that the economy's current account deficit had reduced from 4.4 per cent of gross domestic product to 1.8 per cent.
Dr Basri is in Australia to attend the Group of 20 finance ministers and central bankers meeting in Sydney this weekend.
Treasurer Joe Hockey, who is hosting the event, expects there will be heated discussion over the Fed's tapering among some emerging economies.
