Government to unveil upbeat 2005 economic outlook<\/p>\n
Dadan Wijaksana, The Jakarta Post\/Jakarta<\/p>\n
The government is to unveil the draft 2005 state budget on
\nMonday, which outlines an optimistic economic growth outlook of
\n5.4 percent, defying concerns of a threat to the global economy
\namid the current surge in oil prices.<\/p>\n
The growth target, agreed to by a House of Representatives
\ncommission on the budget and the government in June (along with
\nother macroeconomic targets), is higher than those set out by
\nfive institutions including the International Monetary Fund and
\nAsian Development Bank. Of these, only Bank Mandiri predicted
\ngrowth of above 5 percent (see table).<\/p>\n
The assessment of Deutsche Bank said that the country's
\nexports would be hurt by possible slower economic pace in the
\nU.S. and Japan, with the soaring oil price -- which has been
\nhovering at record highs of above US$44 not 45? per barrel --
\nbecoming the latest factor.<\/p>\n
However, Minister of Finance Boediono has said that the upbeat
\noutlook is realistic enough, as the less robust export showing
\nwould likely be compensated for by a return of investment.<\/p>\n
"Even if there is a slowdown in the world economy, we expect
\nthe 'internal dynamics' would be able to cope with it," Boediono
\nsaid in reference to improved political, social and economic
\nconditions in the country following trouble-free general
\nelections.<\/p>\n
Investment, especially offshore, has been in the doldrums with
\nits contribution to gross domestic product (GDP), which measures
\neconomic growth, at a modest level of around 15 percent in the
\npast few years.<\/p>\n
Foreign investment used to be the main growth driver before
\nthe crisis.<\/p>\n
For 2004, the government has penciled in a growth target of
\n4.8 percent.<\/p>\n
Dradjad Wibowo, an economist at Institute for the Development
\nof Economics and Finance (Indef), while agreeing that investment
\nwould be of high importance next year amid relatively low exports
\nand flat domestic consumption, said the target would be hard to
\nmeet.<\/p>\n
"Unless there are drastic measures in which the (next)
\ngovernment could allocate more to pro-growth expenditure, the
\ntarget is a hard one to achieve," he told The Jakarta Post on
\nSunday.<\/p>\n
"For that, we will need a less conservative, risk-taking
\neconomic team in the next government," he added.<\/p>\n
The government's pro-growth expenditure -- such as
\ninfrastructure development, which has a direct impact on the
\neconomy as a whole -- has been severely crippled by its
\nobligation to repay huge public debts, both domestic and foreign.<\/p>\n
Nevertheless, even if the economic growth projection is
\nrealized, it will still be insufficient to absorb fully the 2.5
\nmillion new workers who will enter the job market next year, let
\nalone reduce current open unemployment of 10.5 million.<\/p>\n
Elsewhere, President Megawati Soekarnoputri is expected also
\nto reveal other macroeconomic assumptions in next year's budget
\nthat include an inflation rate of 5.6 percent (as compared to 6.5
\npercent this year), a rupiah exchange rate of 8,600 per US dollar
\n(unchanged) and an oil price of $24 per barrel ($22).<\/p>\n
RI Economic Growth Outlook
\n------------------------------------------------------------------<\/p>\n
Govt IMF ADB StanChart Deutsche Bank Bank Mandiri
\n------------------------------------------------------------------
\n2004 4.7% 4.8% 4.5% 4.5% 4.7% 4.7%
\n2005 5.4% 5.0% 4.5% 5.0% 4.5% 5.1%
\n------------------------------------------------------------------
\nSource: The Jakarta Post files<\/p>",
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