4% growth unlikely given war, SARS: Government
4% growth unlikely given war, SARS: Government
The Jakarta Post, Jakarta
The ongoing war in Iraq, coupled with the spread of Severe Acute
Respiratory Syndrome (SARS), would deal a blow to the economy
making it very unlikely that it would expand by 4 percent this
year as initially targeted, a senior government official said.
"The 4 percent growth target will be hard to achieve given
international developments," Jannes Hutagalung, a deputy in the
Office of the Coordinating Minister for the Economy, told
reporters on Thursday.
Under this year's state budget, the economy is targeted to
expand by 4 percent.
However, the Iraq war would further slow down the global
economy which would in turn hurt the country's exports and
investment performance, Jannes said.
As for SARS, he went on, it would provide another blow to the
country's tourism sector, which was still feeling the pinch from
last year's terrorist attacks on the resort island of Bali.
Taking together, there was now an unfavorable climate for the
economy to expand.
"The longer the war, the bigger the burden our economy will
have to shoulder, while the spread of SARS will further hit our
tourism industry," Jannes said.
He did not elaborate on how much the economic growth estimate
would be cut as a result of the negative external developments.
But, his remarks came as analysts in general were busy revising
downward their growth projections.
On Wednesday, investment bank Morgan Stanley revised downward
its growth estimate for Asia from 5.1 percent to 4.5 percent,
which was based on the most optimistic scenario. Specifically for
Indonesia, the bank estimated that SARS and the Iraq war would
trim the country's economic growth by 0.2 percent.
This would further hamper the government's efforts to speed up
economic growth so as to absorb huge numbers of unemployed in the
country.
Indonesia's economy has been growing steadily at between 3
percent and 4 percent over the past couple of years, an expansion
deemed insufficient to absorb around 2.5 million new workers each
year.
In order to do that, analysts have said the economy would need
to expand by between 6 percent and 7 percent every year,
something that is difficult to achieve giving collapsing
investment and unimpressive export figures.
Even before the war and the emergence of SARS, investment here
was hard to come by due to unfavorable climate in Indonesia,
while the slowdown in world economy continued to limit the global
demand for exports.
Last year, the economy managed to grow by 3.6 percent, thanks
largely to continued robust consumer spending.
Elsewhere, to minimize the impact on the economy, the
government has pledged to boost exports and investment in order
to try to attain the 4 percent growth target.
As regards exports, destinations need to be diversified so
that the country becomes less dependent on its traditional
destination countries, such as the U.S., Japan and Singapore,
whose economies have all been affected by the downturn in the
global economy.
The Jakarta Post, Jakarta
The ongoing war in Iraq, coupled with the spread of Severe Acute
Respiratory Syndrome (SARS), would deal a blow to the economy
making it very unlikely that it would expand by 4 percent this
year as initially targeted, a senior government official said.
"The 4 percent growth target will be hard to achieve given
international developments," Jannes Hutagalung, a deputy in the
Office of the Coordinating Minister for the Economy, told
reporters on Thursday.
Under this year's state budget, the economy is targeted to
expand by 4 percent.
However, the Iraq war would further slow down the global
economy which would in turn hurt the country's exports and
investment performance, Jannes said.
As for SARS, he went on, it would provide another blow to the
country's tourism sector, which was still feeling the pinch from
last year's terrorist attacks on the resort island of Bali.
Taking together, there was now an unfavorable climate for the
economy to expand.
"The longer the war, the bigger the burden our economy will
have to shoulder, while the spread of SARS will further hit our
tourism industry," Jannes said.
He did not elaborate on how much the economic growth estimate
would be cut as a result of the negative external developments.
But, his remarks came as analysts in general were busy revising
downward their growth projections.
On Wednesday, investment bank Morgan Stanley revised downward
its growth estimate for Asia from 5.1 percent to 4.5 percent,
which was based on the most optimistic scenario. Specifically for
Indonesia, the bank estimated that SARS and the Iraq war would
trim the country's economic growth by 0.2 percent.
This would further hamper the government's efforts to speed up
economic growth so as to absorb huge numbers of unemployed in the
country.
Indonesia's economy has been growing steadily at between 3
percent and 4 percent over the past couple of years, an expansion
deemed insufficient to absorb around 2.5 million new workers each
year.
In order to do that, analysts have said the economy would need
to expand by between 6 percent and 7 percent every year,
something that is difficult to achieve giving collapsing
investment and unimpressive export figures.
Even before the war and the emergence of SARS, investment here
was hard to come by due to unfavorable climate in Indonesia,
while the slowdown in world economy continued to limit the global
demand for exports.
Last year, the economy managed to grow by 3.6 percent, thanks
largely to continued robust consumer spending.
Elsewhere, to minimize the impact on the economy, the
government has pledged to boost exports and investment in order
to try to attain the 4 percent growth target.
As regards exports, destinations need to be diversified so
that the country becomes less dependent on its traditional
destination countries, such as the U.S., Japan and Singapore,
whose economies have all been affected by the downturn in the
global economy.