Despite recent signs of recovery, no one should expect too much from the economy this year, President Susilo Bambang Yudhoyono warned on Wednesday.
Some pundits are predicting an impending bottom to the global recession, and with the governments‚Äô fiscal stimulus package taking effect, market sentiment has improved. This has helped encourage a surge of capital into emerging markets, including Indonesia‚Äôs. These ‚Äúhot-money‚ÄĚ inflows have contributed to the strengthening of the rupiah, economists say.
But despite these and other signs, the government said it would stick to its current projections of 4 to 4.5 percent growth for this year, with economic recovery predicted for 2010 and the economy forecast to grow at 5 percent to 6 percent next year.
‚ÄúTo scale up economic growth to the highest [rate]Ö is not possible. It is not realistic, ‚Äú Yudhoyono said the opening of the National Development Planning Convention in Jakarta‚Äôs Bidakara Hotel.
‚ÄúThe world recession is not over yet, although there are some signs that it has reached the bottom and there have been signs for a recovery,‚ÄĚ Yudhoyono added.The convention, held to prepare a working plan for the next administration, was attended by all ministers of the United Indonesia Cabinet and representatives of local governments.
Finance Minister Sri Mulyani In drawati told the convention that the government expected to cut the budget deficit to 2.5 percent of gross domestic product in 2009 and to 1.3 percent in 2010, with the main focus on improving purchasing power through continuing fiscal stimulus. The government also expects to continue tax incentives such as cutting the corporate income tax by 3 percent from the current 30 percent.
The government will seek to cut poverty and unemployment, with poverty targeted to fall to 12 to 13.5 percent of the total population for 2010, down from 12 to 14 percent target set for 2009. It also aims to bring down unemployment to 8 percent, down from 8.3 to 8.6 percent in 2009.
Inflation is expected to ease to 4.5 percent to 5.5 percent in 2010, down from a 5 to 6 percent target in 2009. The rupiah, which was hit hard in 2008, is expected to strengthen to 9,500 to 10,500 per US dollar in 2010 from a predicted 10,000 to 11,000 in 2009.