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Indonesian Economic Growth Can Reach 6 Percent - Economists
Source: thejakartapost.com
Source Date: Friday, April 16, 2010
Focus: Institution and HR Management
Country: Indonesia
Created: Apr 19, 2010

The growth of Indonesian’s gross domestic product (GDP) can reach 6 percent, or above the government’s target of 5.5 percent, this year if there is a little improvement in exports and consumer spending, says a senior economist.

“We still can reach an economic growth of up to 6 percent if there is an increase in consumer spending and a little improvement in export performance, M. Chatib Basri, a senior economist at the University of Indonesia, told the Fourth Sadli Lecture in Jakarta on Thursday.

Indonesia’s GDP growth reached 4.5 percent last year, a higher number than in most other countries that were also caught in the wake of the 2008 financial crisis.

He said last year’s growth momentum would continue and even strengthen this year because most of Indonesia’s trade partners affected by the financial crisis were also showing signs of recovery.

He said exports for certain commodities would continue to expand this year.

“The strengthening of rupiah to Rp 9,000 against the US dollar will not affect exports,” he added.

A strong rupiah will not affect exports as long as the currency continues to show stability. “It’s not the level of the currency but its volatility that could affect exports,” he added.

Also at the event, Trade Minister Mari Elka Pangestu said the next five years would be more challenging economically despite improvements in the world’s economy.

“Despite surviving the 2009 global financial crisis and not reexperiencing the Great Depression that everybody had feared, I think all the analysis will show that we will still face a weaker global economy,” she said in her speech.

However, she added that the recent global crisis was not similar to the Great Depression.

But for the least developed countries, coming out of a contraction of financial sectors will still take time, she said.

“We experienced how difficult it was to come out of the Asia financial crisis in 1998, after which, I would say, it took almost eight years to get back to normal,” she said.

Separately, Professor Wing Thye Woo from the University of California, said Indonesia had outperformed Malaysia and Thailand due partly to a decisive common policy during the first period of Susilo Bambang Yudhoyono’s presidency.

He said Indonesia’s current lower income level was related to the Soeharto era, in which insufficient focus was paid to increasing welfare for the poor.

“They [The Soeharto regime} did quite a lot of things after 1967. But these programs weren’t expanded as much as the economy group,” said Woo, who is also a lecturer at the Central University of Finance and Economics in Beijing.

Given the kind of current political system in Indonesia, he expected the country’s lower income level would improve, thanks to the establishment of the open election and free press.

He said, for improving the people’s welfare, the Indonesian government certainly needed fiscal stimulus.
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