U.S. attacks may derail RI's recovery<\/p>\n
JAKARTA (JP): Economists warned that terrorist attacks on the
\nU.S. could create a deeper global economic recession and derail
\nIndonesia's fledgling economic recovery.<\/p>\n
\"The terrorist attack on New York's World Trade Center towers
\nand Washington's Pentagon could drag the United States into a
\nlonger and deeper economic crisis which could degenerate into a
\nglobal economic recession,\" economist Sri Adiningsih of the
\nYogyakarta-based Gadjah Mada University told The Jakarta Post on
\nSaturday.<\/p>\n
She explained that the impact on Indonesia's economy could
\ninclude a drop in exports and foreign investment.<\/p>\n
\"This is worrisome since both the 2001 state budget and the
\n2002 budget draft cannot stimulate economic growth,\" she said.<\/p>\n
The government has targeted economic growth of around 5
\npercent in 2002 compared to the 3.5 percent growth targeted for
\nthis year.<\/p>\n
Two hijacked airplanes slammed into the WTC, and another into
\nthe Pentagon last week, creating new uncertainty in the world
\neconomy.<\/p>\n
There has also been speculation that the attacks will cause
\nthe government's macroeconomic assumptions as set out in the 2002
\ndraft budget to be revised. In addition to the above economic
\ngrowth target, the assumptions include an inflation rate of 8
\npercent, exchange rate of Rp 8,500 per U.S. dollar, and an
\ninternational oil price of US$22 per barrel.<\/p>\n
Local exporter associations had earlier predicted that the
\nterrorist attacks on the U.S. could cause exports to drop by
\nbetween 10 percent and 20 percent this year.<\/p>\n
Economist Sjahrir said the terrorist attacks would prompt the
\nU.S., Indonesia's second biggest trading partner and one of the
\ncountry's large foreign investors, to focus on its own economy
\nand security rather than on international economic issues.<\/p>\n
\"The U.S. will likely shift from its current multilateral
\nforeign policy to a unilateral policy,\" Sjahrir said.<\/p>\n
The government's plan to push the private sector to play a
\ngreater role in bringing about a recovery in the country's
\neconomy through accelerating the privatization program and the
\nsale of assets under the Indonesian Bank Restructuring Agency
\n(IBRA), could also be undermined as investors would likely adopt
\na wait-and-see approach for quite sometime.<\/p>\n
\"What we are afraid of is international investors will think
\nthat since doing business and investing in the U.S. is no longer
\nsafe, doing business and investing in other countries, including
\nIndonesia, is also not safe,\" Sri said.<\/p>\n
\"If that happens, they will adopt a wait-and-see attitude,
\nwhich means that the flow of international investment and trade
\nwill be sluggish,\" she added.<\/p>\n
Meanwhile, economist Hadi Soesastro of the Centre for
\nStrategic and International Studies (CSIS) and Didik J. Rachbini
\nof the Institute for Development of Economics and Finance
\n(Indef), played down the real impact of the terrorist attacks on
\nIndonesia's economy, arguing that the country's economic
\ndifficulties stemmed from domestic problem.<\/p>\n
\"The impact (of the terrorist attacks) is insignificant and
\nindirect,\" said Hadi.<\/p>\n
He admitted, however, that the attacks might affect the
\ncountry's exports to U.S., but argued that any fall would have
\nlittle bearing on Indonesia's economic growth.<\/p>\n
\"Export-driven economic growth is not sustainable since it
\ndoes not reflect good and sound economic conditions,\" said Hadi,
\nadding that increased exports do not necessarily mean sound
\neconomic conditions.<\/p>\n
He said the priority for Indonesia was to implement the
\neconomic reform agenda pledged to the International Monetary Fund
\n(IMF) if it wanted to put its economy back on track.<\/p>\n
Didik concurred with Hadi, saying Indonesia was too far from
\nthe U.S. to suffer the impact of the terrorist attacks.<\/p>\n
He said the attacks could, in fact, serve as a blessing in
\ndisguise for Indonesia. (03)<\/p>",
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"sponsor": "Okusi Associates",
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