Thursday, 24 January, 2008 | 16:16 WIB
TEMPO Interactive, Jakarta:The International Monetary Fund (IMF) has warned that Southeast Asian countries may be the worst hit by the impacts of the United States' weakening economy, compared to other regions.
According to Steven Dunaway, IMF's Deputy Director for Asia and the Pacific, Southeast Asian countries' efforts to survive the recession impact will be quite heavy.
As exporters to the USA, Southeast Asian countries - including Indonesia - must compete tightly with China in terms of fighting for US export market segments that are now decreasing.
“This is especially so as the prices of China's export products are more competitive,” he said as quoted by AFP in Washington yesterday (23/1).
Dunaway said that Southeast Asian countries will be helped if China also absorbs products from the region.
If China does not have a role, Southeast Asian countries will face difficulties in avoiding the US recession and their economies will decrease.
Every one percent point decrease in US economic growth will cut between 0.5 and 1 percent point off Southeast Asian countries' economic growth.
Last Tuesday, investors panicked and global stock exchanges collapsed to their lowest points.
President George W. Bush's effort to save the US economy by launching a tax policy last week completely failed.
On the same day, the US central bank The Fed cutting the interest rate by 75 base points to 3.5 percent.
This was the largest cut since 2001 and could temporarily calm panicking investors.
Yesterday the world's major stock exchanges rose.
Hong Kong Hang Seng's index, for example, soared 10.7 percent after dropping by 8.7 percent a day before, and Japan Nikkei's index rose two percent.
Indonesia Stock Exchange's (BEI) index also went up sharply by 7.92 percent after falling 7.7 percent on Tuesday.
In Jakarta yesterday, President Susilo Bambang Yudhoyono called economic ministers and asked for explanations about the measures to anticipate the threat of an economic recession.
Coordinating Minister for the Economy, Boediono, explained that one of the measures was by balancing expenditure and revenue in order to secure the State Budget.
Finance Minister Sri Mulyani added that the threat of a US recession threat could affect the projections of 2008 economic growth, targeted to be 6.8 percent.
In order to lower the impact, the government will issue fiscal policies including reducing import duties, giving subsidies and creating incentives for companies so as their finances are not too burdened.
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