Indef predicts higher inflation, slower growth<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The increases in the prices of fuel products, electricity and
\ntelephone charges will boost inflation to around 11.8 percent
\nthis year, and slow economic growth to 3.1 percent, according to
\nthe Institute for Development of Economics and Finance (Indef), a
\nJakarta-based private think-tank.<\/p>\n
Indef economist Iman Sugema said on Tuesday that the
\nsimultaneous price increases would drive up prices of goods and
\nservices much higher than initially projected.<\/p>\n
He was quoted by detik.com as saying that the think-tank
\ninitially projected this year's inflation to reach 9.7 percent,
\ncompared to the government's target of 9 percent.<\/p>\n
Indef has been a strong critic of the utility price hikes
\npolicy, launched earlier this month in a bid to cut expensive
\ngovernment subsidies and help troubled state-owned utilities.
\nThe think-tank said the timing of the policy was not appropriate
\nconsidering the weak economic condition of the people.<\/p>\n
The much higher inflation would cut into the purchasing power
\nof the people and put a brake on domestic consumption, which has
\nbeen the main driver of economic growth during the past couple of
\nyears.<\/p>\n
Indef said the utility price hikes would have a negative
\nimpact on economic growth this year.<\/p>\n
It previously forecast growth to reach 3.4 percent, but had
\nrevised the forecast down to between 2.8 percent and 3.1 percent.<\/p>\n
The government initially projected growth this year to reach 5
\npercent, but after the Oct. 12 Bali bombings had cut the forecast
\nto 4 percent.<\/p>\n
Indef said the stronger inflation and slower economic growth
\nwould hamper efforts to reduce the number of poor in the country
\nof more than 210 million people.<\/p>\n
The number of poor in 2002, according to official figures, is
\n17 percent. The government aims to reduce it to 15 percent this
\nyear.<\/p>\n
But Indef said the greater economic hardships caused by the
\nprice rises would only lower the number of poor people to about
\n16.4 percent this year.<\/p>\n
Meanwhile, another Indef economist, Aviliani, said stronger
\ninflation would limit room for the central bank to further reduce
\nits benchmark interest rate to below 13 percent.<\/p>\n
She said this would mean lending rates remained expensive for
\nthe real sector.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indef-predicts-higher-inflation-slower-growth-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}