Welcome Guest   |  Login   |   Signup
JG Logo
Thu, May 24, 2012
Archive Search

Indonesia Cuts Economic Growth Forecast Amid Global Financial Problems
Dion Bisara | February 14, 2012

The Finance Ministry says Indonesia’s economy will grow up to 6.6 percent this year. (JG Photo/Afriadi Hikmal) The Finance Ministry says Indonesia’s economy will grow up to 6.6 percent this year. (JG Photo/Afriadi Hikmal)
Share This Page
0
5
0
4
Share with google+ :


Post a comment
Please login to post comment

Comments

devine
5:14pm Feb 17, 2012

SBD; partly agree. But the point is the view as an exporter. Our products are not competitive in comparision with other Asian Nations. Fuel was probably the wrong sample, but then the subsidies should not be here anyway. I am more talking about handycraft and small industry products that have the potential to employ many people. And that is what our country needs...heeps of jobs admist the fact that we grow by 5-7 mio people a year. Have your realized that inflation still goes up despite a strong IDR? Were I live beras went up a whooping 30% within a year, cement just got up 15% and and and just every other basic commodity. While the Govt tells us inflation is at 3.4%...

How comes that almost EVERY product made in China is substaintialy less expensive... how comes that NONE of our industries or products of same quality can compete with their products...? A lower IDR would certainly GREALTLY help...

Serigala-Berbulu-Domba
10:22pm Feb 16, 2012

devine

I think you will find that Indonesia imports significantly more oil and oil products than it exports (I'm excluding oil exported by foreign-owned PSC interests) and hence the BBM subsidy amount would be reduced if the Rupiah is in fact overvalued viv a vis the US dollar. The inflation rate would also be lower if in fact the Rupiah is overvalued against foreign currencies.

devine
9:04pm Feb 16, 2012

It wont help that BI is continuing manipulating the IDR one way only. The IDR is overvalued and our export competitivness is therefore cut at times when we need it most. Other countries are smarter on this...

Fair value would be 9400-9765, at least. All exporters would profit resulting in increased tax payments. It seems also to be forgotten (up there at BI) that salaries are paid in IDR and not USD. So, i.e. for every barrel of oil we sell we get 5-10% less IDR. But who cares? Those up there can now buy Mercedes and BWM at a cheap price... or get their condo in Singapore even cheaper... seems that is all what counts...

jchay
8:17pm Feb 16, 2012

With political and social turmoils going on (Democratic Party, DPR's credibility, banning FPI, labor strike etc), I wonder what's left when Indonesia falls hard on next economy crisis..? Nothing to be proud of, except perhaps having extremist mobs and thugs like FPI.

  • Previous
  • 1
  • Next

The Finance Ministry has lowered its forecast for the nation’s economic growth this year to reflect the impact of the euro zone’s sovereign debt crisis and the global slowdown, Deputy Finance Minister Anny Ratnawati said.

The finance ministry cut its estimate to the range of 6.5 percent to 6.6 percent from the forecast of 6.7 percent that it set in the state budget in October.

Any change in the forecast must prompt legislators to amend the state budget because it affects the state’s spending plans and deficit. Proposals for budgetary changes might be made as soon as next month. “We have to consider the global economic situation and the euro zone crisis,” Anny said on Tuesday.

Analysts and economists in Jakarta said that demand from the euro zone and the United States for commodities from Indonesia may slow this year, which in turn might affect the country’s economic growth.

Finance Minister Agus Martowardojo said that Indonesia will be affected by the sovereign debt crisis in the euro zone, where demand is slowing for Chinese goods. Slowing demand will in turn reduce Chinese demand for goods from Indonesia, which mainly supplies commodities such as rubber, coal and crude palm oil to China.

Several international financial institutions have recently revised down their forecast on Indonesia’s economy this year. Manila-based Asian Development Bank, whose mission is to boost development and eradicate poverty in the region, reduced its forecast last month to 6.4 percent from 6.8 percent, citing the debt crisis in Europe.

The central bank, Bank Indonesia, cut its economic growth forecast to 6.3 percent this year from its original forecast of 6.7 percent. The economy expanded 6.5 percent last year, putting it ahead of emerging economy peers such as Malaysia and Thailand. It was also the fastest pace of growth since 1996.

Signs of weakness in exports have been felt since December. Export growth slowed to 2.2 percent from a year earlier after gaining 10.2 percent in November, Central Statistics Agency (BPS) data showed. It was the smallest increase since September 2009, when exports plunged by 19 percent.

Agus said the government was monitoring the global price for crude oil amid turmoil in the Middle East. Oil was recently quoted at $101.43 a barrel in New York trading. Indonesia imports some crude oil to meet demand and higher prices might widen the budget and cause fuel subsidy costs to rise. “We watch the conflict there closely,” Agus said.

Agus noted that the Indonesia Crude Oil Price, which Indonesia uses as a reference for oil, was at $124.90 per barrel at the end of January, higher than the $90 a barrel target it set in the 2012 state budget. The budget set a target of crude oil production at 950,000 barrels per day this year, up from last year’s 904,000 bpd output.

“We may also miss our oil production target,” Agus said.