BI upbeat on 2004 growth despite election<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Bank Indonesia Governor Burhanuddin Abdullah expressed optimism
\nthat the economy could grow higher at around 4.8 percent in 2004
\ndespite the election year.<\/p>\n
Burhanuddin is also convinced that the election process would
\ngo smoothly because there are no clearly dominant political
\nparties in the election, a situation that will force parties to
\nform coalitions and lessen friction between themselves.<\/p>\n
"If there is no friction, then the election will be orderly
\nand safe. There may be some small internal party friction, but
\nthat can be controlled by the party itself. So the 2004 general
\nelection will be peaceful and calm," he told reporters on Monday
\nat a post-Idul Fitri press conference.<\/p>\n
He also said that the election period would provide a further
\nboost to domestic consumption because of stronger consumer
\nspending particularly during the campaigning period.<\/p>\n
Domestic consumption has been the country's main engine of
\ngrowth during the past four years amid weak investment and export
\nperformance.<\/p>\n
The government in the 2004 state budget has targeted the
\neconomy to grow by 4.8 percent, from the estimated 4 percent for
\nthis year, particularly if strong domestic consumption continues.<\/p>\n
But some analysts have previously warned that domestic
\nconsumption could likely slow down next year as the people's
\npurchasing power had started to weaken due in large part to the
\nrising number of unemployed people as companies continued to put
\ninvestment on hold in some case, and others have moved away to
\nother countries, which have a better investment climate.<\/p>\n
There is also concern that the 2004 general election, a seven-
\nmonth process, will make companies shy away from further
\ninvestment and other spending. It will be the country's first
\ndirect presidential election, which some fear could turn chaotic.<\/p>\n
Burhanuddin acknowledged that there had been rising questions
\non the sustainability of domestic consumption to maintain
\neconomic growth.<\/p>\n
He said that the central bank will conduct more research on
\nthe economy's prospects as it relates to decentralization.<\/p>\n
"We'll ask (our staff) to do more research to determine
\nwhether there has been a positive impact from the regional
\nautonomy and fiscal decentralization on the people's finances,
\nwhich determine their consumption level," he said.<\/p>\n
He said that sustainable economic growth should not rely
\nsolely on consumption, but must also be supported by a healthy
\ninvestment performance, which can create jobs.<\/p>\n
Analysts have said that the country's economy ideally needs to
\ngrow at a minimum of pre-crisis levels of between 6 percent and 7
\npercent in order to create enough jobs for the tens of millions
\nof unemployed people.<\/p>\n
On inflation, Burhanuddin said that the consumer price index
\nwould be in the range of 6 percent and 7 percent next year.<\/p>\n
He said that despite the relatively low inflation, there would
\nnot be much room for the central bank to continue to lower its
\nbenchmark interest rate amid a recovery in the economies of the
\nU.S., Europe and Japan. Their economic growth will put the
\nbrakes on the downward trend in global interest rates.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bi-upbeat-on-2004-growth-despite-election-1447893297",
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