Economy faces triple-whammy next year<\/p>\n
A. Asohan, Asia News Network\/Bangkok<\/p>\n
The Indonesian economy faces a trio of challenges next year --
\nthe high price of crude oil, decelerating economic growth and one
\nof the highest inflation rates in Asia-Pacific.<\/p>\n
Ongoing concern about terrorist attacks, boosted by the second
\nBali bomb blasts on Oct. 1, is not going to help matters either,
\nthe United Nations Economic and Social Commission for Asia and
\nthe Pacific (UNESCAP) said in its first-ever report on Key
\nDevelopments and Prospects in the Asia-Pacific Region.<\/p>\n
Still, the single biggest concern has to be the rising price
\nof oil. In October, President Susilo Bambang Yudhoyono's
\nadministration finally swallowed the bitter pill and raised fuel
\nprices by an average of 126 percent.<\/p>\n
Indonesia's fuel subsidies remain one of the two highest in
\nAsia-Pacific however, at Rp 89.2 trillion (US$9.12 billion) for
\nthe 2004-2005 fiscal year.<\/p>\n
The country's gross domestic product (GDP) growth will slow
\ndown to 5 percent next year from 5.3 percent in 2005; while
\ninflation will decrease slightly from 8 percent to 7.6 percent.<\/p>\n
Both rates do not compare favorably with the regional average.
\nReal GDP growth in Asia-Pacific is expected to be 6.2 percent in
\n2006, a fraction off the 6.3 percent recorded this year.
\nInflation will rise, but at a more muted level of 4.4 percent
\nnext year from 4.8 percent in 2005.<\/p>\n
\"We expect the same range of economic growth next year across
\nthe region,\" UNESCAP Executive Secretary Kim Hak-su said at a
\nmedia conference here on Wednesday where the report was released.<\/p>\n
The report complements the annual Economic and Social Survey
\nof Asia and the Pacific also published by UNESCAP.<\/p>\n
However the above projections depend on oil prices staying at
\nthe $50 per barrel range.<\/p>\n
An increase of $10 over a sustained period of perhaps six
\nmonths would throw the projections off slightly -- regional GDP
\ngrowth will be 0.5 percentage points lower and inflation 0.5
\npercentage points higher, said Kim, also the UN Under-Secretary-
\nGeneral.<\/p>\n
Any increase in the price of oil would adversely affect oil-
\nimporting countries, slowing economic growth and creating
\ninflationary pressure.<\/p>\n
UNESCAP recommends a gradual phasing out of oil subsidies,
\nwhich many countries are finding difficult to sustain anyway.
\nTighter monetary policies would also have to be formulated to
\nstave off the inflation that will be caused by higher oil prices.<\/p>\n
Many governments, including Indonesia's, are reluctant to
\nphase out oil subsidies, especially those with volatile political
\nenvironments, arguing that removing such subsidies would impact
\nthe region's poor the most.<\/p>\n
\"But you have to ask whether these subsidies are really
\nreaching the poor,\" said Ravi Ratnayake, director of UNESCAP's
\nProperty and Development Division.<\/p>\n
\"If they really want to help the poor, governments should
\ninstead look at subsidizing the alternative energy sources that
\nthe poor use, such as kerosene,\" he added.<\/p>\n
The establishment of regional oil reserves might help, but
\nUNESCAP also recommends that governments -- including those of
\noil-exporting countries -- develop longer-term policies to reduce
\noil dependency, looking more seriously into alternative energy,
\nas well as energy efficiency and conservation.<\/p>\n
-- Related story on Page 16<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/economy-faces-triple-whammy-next-year-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }