IMF projects Indonesian economy to contract 4%<\/p>\n
WASHINGTON (Agencies): Indonesia continues to lag behind other
\nrecovering Asian economies because of delays in IMF-managed
\nstabilization programs and the persistence of \"political and
\nsocial tensions,\" the International Monetary Fund said on
\nTuesday.<\/p>\n
The IMF said in its latest global economic outlook that
\nIndonesia has to work harder at restructuring state-owned banks
\nand resolving a huge amount of corporate debt.<\/p>\n
It predicted that Indonesia's economic contraction this year
\nwill abate to minus 4 percent from minus 13.7 percent last year.<\/p>\n
The IMF also said the worst was over for Asia's one-time tiger
\neconomies and it forecast growth in Thailand and South Korea this
\nyear.<\/p>\n
Reassessing its December review of the region's economies, the
\nIMF changed its forecast for South Korea to 2 percent growth in
\ngross domestic product from minus 1 percent; its prediction for
\nMalaysia went from minus 2 percent to growth of 0.9 percent.<\/p>\n
The IMF found Korea to be recovering faster than generally
\nexpected as a result of financial-sector reforms, a revived stock
\nmarket and renewed interest by direct investors.<\/p>\n
Malaysia also is performing better than expected largely
\nbecause of stronger demand for Malaysian exports since September,
\nwhen the government pegged the ringgit at 3.80 to the U.S.
\ndollar, the IMF said.<\/p>\n
The IMF affirmed its prediction that Thailand will break out
\nof its economic slide this year, and that the Philippines will
\nstep up the pace of its recovery.<\/p>\n
The IMF predicted an easing of the world's painful economic
\ncrisis and said global growth would rise to 3.4 percent next year
\nfrom a projected 2.3 percent in 1999.<\/p>\n
But the fund admitted its 2000 forecasts could be too
\noptimistic. The U.S. economy might slow faster than expected,
\nJapan could stay mired in recession or Europe would be unable to
\ngrow fast enough to take up the world economic slack.<\/p>\n
\"For 1999, I believe the risks are evenly balanced,\" IMF chief
\neconomist Michael Mussa told a news conference launching the
\nfund's semi-annual World Economic Outlook, which looks at
\nprospects around the world.<\/p>\n
\"For the year 2000 the forecast is for growth to recover to
\n3.4 percent, but there the balance of risks is on the downside.\"<\/p>\n
Mussa said that the world economy looked healthier than it did
\njust three or four months ago, when financial markets were
\nworried about the situation in Brazil and elsewhere in Latin
\nAmerica. \"I do believe that the worst of this crisis is behind
\nus,\" he said.<\/p>\n
But Mussa's latest comments were considerably more upbeat than
\nprevious assessments, when the fund warned that the world could
\ntumble into recession.<\/p>\n
\"The risk of recession is comparatively low,\" he said. \"The
\nrisk is maybe not so much that growth next year will be below
\ngrowth this year, but that growth next year will not recover by
\nthe full percentage point that is our baseline forecast.\"<\/p>\n
The report revised the IMF forecast for U.S. 1999 growth up to
\n3.3 percent, from a December 1998 forecast of 1.8 percent. But it
\nlowered growth projections in Japan, Europe and Brazil.<\/p>\n
\"We do not yet see clear evidence that we have got a turning
\npoint in Japan,\" Mussa said. \"We need a little bit more
\ninformation that the bottom has occurred.\"<\/p>\n
The comments dimmed hopes that Japan, where the economy shrank
\n2.8 percent last year, could soon emerge from its deep recession
\nand the yen eased in response.<\/p>\n
\"There is some tentative evidence that capital controls helped
\nreduce a country's probability of suffering a crisis during the
\nMexican and the Asian crises, but they were less effective for
\nthe type of widespread withdraw of investors from emerging
\nmarkets that followed the outbreak of the Russian crisis,\" the
\nIMF said.<\/p>\n
Just two years ago the IMF, along with other institutions, was
\nlobbying strongly for the relaxation of capital controls, arguing
\nthat free flows of money helped countries grow. The mood has now
\nshifted and the institutions say countries must build the right
\ninfrastructure before easing controls.<\/p>\n
The IMF admitted that its forecasts did not take account of
\npossible problems stemming from the Year 2000 computer bug, which
\nmay make computer systems crash on Jan. 1 next year.<\/p>\n
\"The macroeconomic effects of the Y2K problem are potentially
\nsignificant, but extremely difficult to quantify,\" it said. \"They
\nshould not be exaggerated...but it is unlikely that all problems
\ncan be addressed in time.\"<\/p>\n
The IMF is predicting that Asia's economies will all grow by
\n2000.<\/p>\n
Table: Growth rates in inflation-adjusted GDP<\/p>\n
1997 1998 1999* 2000*<\/p>\n
------------------------------------------------<\/p>\n
Australia 3.6 5.1 3.1 3.2<\/p>\n
China 8.8 7.8 6.6 7.0<\/p>\n
Hong Kong 5.3 -5.1 -1.3 3.1<\/p>\n
India 5.5 5.6 5.2 5.1<\/p>\n
Indonesia 4.6 -13.7 -4.0 2.5<\/p>\n
Japan 1.4 -2.8 -1.4 0.3<\/p>\n
Malaysia 7.7 -6.8 0.9 2.0<\/p>\n
New Zealand 2.1 -0.3 2.7 3.3<\/p>\n
Philippines 5.2 -0.5 2.0 3.0<\/p>\n
Singapore 8.0 1.5 0.5 4.2<\/p>\n
South Korea 5.5 -5.5 2.0 4.6<\/p>\n
Taiwan 6.8 4.9 3.9 4.8<\/p>\n
Thailand -0.4 -8.0 1.0 3.0<\/p>\n
Vietnam 8.8 3.5 3.5 4.5<\/p>\n
* Revised estimates<\/p>\n
Source: International Monetary Fund<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/imf-projects-indonesian-economy-to-contract-4-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }