APEC analysts predict slower growth for RI<\/p>\n
By Meydiatama Suryodiningrat<\/p>\n
VANCOUVER, Canada (JP): The Asia Pacific Economic Cooperation
\n(APEC) forum predicted an optimistic 6.5 percent growth for
\nIndonesia this year and 6 percent next year.<\/p>\n
But the 1997 APEC Economic Outlook report noted that its high
\ncurrent account deficit had been one of the triggers which caused
\nthe financial crisis in Indonesia.<\/p>\n
The Outlook, remains generally optimistic that the region
\nwould still prosper despite the economic woes.<\/p>\n
The Outlook forecasts an overall sustained expansion for 1998
\nat a rate of 3.1 percent GDP growth for APEC economies, slightly
\ndown from this year's expected region wide growth of 3.4 percent.<\/p>\n
The 122-page report was presented to APEC ministers during
\ntheir meeting here on Friday by John Curtis, chairman of the APEC
\nEconomic Committee.<\/p>\n
The Outlook in its chapter on Indonesia reduced its initial
\nforecast for economic growth in 1997 from 7.1 percent to 6.5.
\nGrowth for 1998 was put at 6.0 percent.<\/p>\n
It cited \"spillover effects of the currency instability in the
\nregion as well as risks to outlook from the haze, which has
\ncurtailed tourist arrivals, and possible weather related
\nreductions in agricultural output from the El Nio effect\" as
\nreasons for the lower growth.<\/p>\n
Dr. Soogil Young, president of the Korean Institute of
\nInternational Economic Policy which coordinated the research,
\nsaid the \"Indonesian economy is generally sound\" and its
\nfinancial sector had a history of being exposed to the
\ninternational scrutiny and thus should be able to recover from
\nthe financial crisis.<\/p>\n
The report noted that despite some decline private investment
\nremains buoyant, reflecting a more conducive business climate
\nfollowing the adoption of various deregulation measures.<\/p>\n
Imbalance<\/p>\n
Among the major concerns cited by the report, is the high
\ncurrent account imbalances of many countries in the region,
\nincluding Indonesia.<\/p>\n
Eight economies -- Australia, Chile, South Korea, Malaysia,
\nIndonesia, New Zealand, the Philippines and Thailand -- have
\ncurrent account deficits exceeding 3 percent of their GDP.<\/p>\n
The Outlook points to large account imbalances as one
\nimportant factors in the financial market instability experienced
\nby some southeast Asian members.<\/p>\n
John Curtis also pointed out that those being hit by the
\neconomic turbulence, Thailand, the Philippines, Malaysia,
\nIndonesia and Korea, were the hardest hit.<\/p>\n
In analyzing the instability the report stresses the
\nimportance of adopting sound macroeconomic policies to address
\nthe underlying causes of recent difficulties, including the need
\nto strengthen financial sectors and increase transparency of
\neconomic and financial policies.<\/p>\n
\"Current account deficits need not be a problem, particularly
\nin economies that are growing rapidly. If the capital inflows are
\nneeded to finance deficits and are underwriting an expansion of
\nthe productive capacity of the economy, current account deficits
\nneed not be associated with an increase in the difficulty of
\nservicing foreign debt,\" the Outlook said.<\/p>\n
Speaking on the prospective of the region, the report says
\nthat throughout the year there has been more than variability in
\ngrowth.<\/p>\n
It said that growth in North America APEC members was faster
\nthan expected but slower in many Asian states.<\/p>",
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