U.S. economic slow down threatens Indonesia's export<\/p>\n
JAKARTA (JP): The economic slowdown in the United States, one
\nof Indonesia's main business partners, could deal a major blow to
\nthe country's exports, economists have warned.<\/p>\n
With recession looming in the U.S economy, it will be
\ndifficult to meet the government's target of export earnings of
\nabout US$60 billion this year, they said.<\/p>\n
\"The slowdown in the U.S economy will have a direct impact on
\nIndonesian exports,\" economist Dradjat H. Wibowo of the Institute
\nfor Economics & Finance Development (Indef) told The Jakarta
\nPost.<\/p>\n
Between January and November of last year, Indonesia booked
\nexport earnings of $56.65 billion, up 28.23 percent from the same
\nperiod the previous year.<\/p>\n
For this year, the government expects exports will increase by
\nonly about 10 percent, partly due to the U.S. economic slowdown.<\/p>\n
The U.S. market absorbed about 16 percent of Indonesia's
\nexports or about $7.23 billion of the total exports between
\nJanuary and November of last year.<\/p>\n
The U.S. economic growth slowed to an annual rate of 1.4
\npercent in the fourth quarter of 2000 from 2.2 percent in the
\nthird, the government reported Wednesday.<\/p>\n
A number of large U.S companies have reported mass lay-offs
\nwithin recent weeks as a result of the country's sluggish market.<\/p>\n
Dradjat said that U.S. consumer confidence had also fallen for
\nthree consecutive months, for the first time in two years.<\/p>\n
\"Consumer confidence in the U.S. is at its lowest for two
\nyears,\" he explained.<\/p>\n
To ward off a recession, he went on, the Federal Reserve had
\ncut its interest rates to 5.5 percent in January. But Dradjat
\nsaid the move would weaken the U.S dollar against other strong
\ncurrencies, thus making imports, including those from Indonesia,
\nmore expensive.<\/p>\n
\"Our products will be relatively more expensive to buy in
\nAmerica than before (the interest cut),\" he said.<\/p>\n
A slowing U.S economy, he continued, would also result in a
\nlower demand for energy.<\/p>\n
\"As demand for energy drops, world oil prices will fall, and
\nthat reduces oil export revenues,\" he said, adding: \"We'll be
\nseeing a cut in our state budget.\"<\/p>\n
Indonesia's export revenues are largely generated by its oil
\nand gas industry.<\/p>\n
Strong oil prices last year fueled Indonesia's high level of
\nexport revenues, which helped the country cover part of its state
\nbudget deficit.<\/p>\n
Separately, president of accounting firm Ernst & Young, Peter
\nW. Knox, expressed a similar warning in respect of Indonesian
\nexport revenues this year.<\/p>\n
However, prevailing political, legal and security
\nuncertainties remained the biggest obstacles for boosting
\nIndonesian exports, he added.<\/p>\n
He said the country might minimize the impact of stagnant
\nexport growth by attracting more foreign capital.<\/p>\n
According to him, Indonesia is a more potential investment
\ndestination than its neighboring countries.<\/p>\n
Irwandy Muslim, the outgoing executive director of the
\nIndonesian Textile Association (API) said orders from the U.S.
\nhad dropped.<\/p>\n
\"We've seen a drastic drop in orders since last December.
\nThroughout January there have been no new orders,\" he admitted.<\/p>\n
He said that for the two months, orders for textile products
\nusually reached about $500 million.<\/p>\n
\"Usually about 30 percent of those orders originate from
\nAmerica, but this has not happened,\" he added.<\/p>\n
According to him, the lackluster demand from the U.S. might
\nlinger for another six to seven months.<\/p>\n
Vice president for investment affairs at the Indonesian
\nChamber of Commerce and Industry (Kadin), Bambang Sujagad
\nSusanto, said the chamber would discuss the effect of the slowing
\nU.S economy at its April meeting.<\/p>\n
He said export-oriented industries should cut the use of
\nimported raw materials to reduce the decline in export revenues.<\/p>\n
\"We should be able to substitute our imported raw materials,\"
\nhe said. (bkm\/05)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/us-economic-slow-down-threatens-indonesias-export-1447893297",
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