JAKARTA, Sept.28 (Xinhua) -- An Indonesian minister forecast account deficit to reach 2.5 percent of the country's Gross Domestic Product (GDP) this year, as demand for the country's exports remains weak, local media reported on Friday.

The estimation was made by Finance Minister Agus Martowardoyo. The minister's estimate was higher than the one made by the International Monetary Fund (IMF) released on Wednesday, which projected a current account deficit of around 2 percent of GDP.

Still, both the government and the IMF acknowledged improvement from a record 6.9 billion US dollars current account deficit in the second quarter of the year, equal to 3.2 percent of GDP.The current account balance is the difference between a country's total exports of goods and services, and its imports of them.

"The current account deficit was mainly due to our imports of capital goods and raw materials," Agus said as quoted by the Jakarta Globe. "That was in line with strong investment here."

In the first half of this year, realized investment rose 28 percent to 148 trillion rupiah (about 15.5 billion US dollars) compared to the same period last year. Actual foreign direct investment rose 28 percent to 107.6 trillion rupiah.

"We and Bank Indonesia will be very careful in managing the deficit," Agus added. "Our latest estimate sees it will be between 2.2 percent and 2.5 percent."

Some economists said that Indonesia's latest trade data suggests a falling current account deficit. Data from the Central Statistics Agency (BPS) showed that the country's trade deficit narrowed to 176.6 million US dollars in August from 1.32 billion US dollars in July.

The IMF, which provided billions of dollars to Indonesia during the Asian financial crisis in 1997, said that Indonesia would continue to be impacted by weak global demand as China growth slows and the euro zone remains in a recession. China and Europe are two of Indonesia biggest trade partners.

Over the medium term, the deficit will remain around 2 percent because of high levels of capital goods imports financed by foreign direct investment, the IMF said in a report.

"The projected current account deficit is not due to any fundamental weakness in the Indonesian economy, but is to be expected given the authorities' welcome plans to boost investment over the medium term," said Sanjaya Panth, the IMF mission chief for Indonesia.

The IMF forecast the country's economic growth to slow to 6 percent this year, lower than that its earlier projection of 6.1 percent.

Indonesia's 820 billion economy, which expanded by 6.5 percent last year, is forecast by the government to expand again by 6.5 percent this year.