‘Attacks Will Not Slow Growth, Shake Stability’
The first major terrorist attack in Indonesia in nearly four years will not hurt economic growth or the country’s hard-won economic stability, Minister of Trade Mari Pangestu said on Monday.
“Based on past experiences, post-bombing the impact is usually on tourism and travel,” Mari said during an interview with Bloomberg Television in Singapore.
“On investment and exports, in the past, there has not been a big effect,” she said.
The minister’s comments were echoed by analysts who noted that the Indonesian economy, Southeast Asia’s largest, had remained robust despite the global economic crisis. They predicted it would continue to thrive.
The economy grew 4.4 percent in the first quarter compared to a year earlier, while neighboring Malaysia’s economy contracted 6.2 percent and Thailand’s slumped 7.1 percent. The International Monetary Fund has estimated that the economy may expand as much as 4 percent this year.
Suicide bombers struck the JW Marriott and Ritz-Carlton hotels in Kuningan, South Jakarta, on Friday, killing seven people.
Dradjad Wibowo, an economist and lawmaker, said fears of terrorism returning to Indonesia might hurt the rupiah and the stock market for a few days at most. He noted that even President Susilo Bambang Yudhoyono’s speech on Friday, in which he said he had received reports indicating the attacks might have been linked to his apparent re-election on July 8, had a minimal effect.
“As a psychological response, the rupiah and other economic indicators might depreciate slightly, but the pressure will be relatively small and temporary,” Dradjad said, citing previous post-bombing market reactions in Jakarta, London and Madrid as examples.
Purbaya Yudhi Sadewa, chief researcher at Danareksa Research Institute, also said the lasting impact would not be significant. “The blasts of course will create negative sentiment toward our capital market, but usually the impact will not last long,” Yudhi said.
He noted that only after the first Bali bombings in 2002 did the market fall sharply.
Nonetheless, Yudhi said the attacks could sour Indonesia’s investment climate, or at least make investors take a harder look at factors that otherwise might have been glossed over.
“At the moment, we do have a lot of fundamental factors that make us less inviting than neighboring countries. So if we want to improve the investment climate, we had better focus on improving our fundamental problems,” he said.
“Based on past experiences, post-bombing the impact is usually on tourism and travel,” Mari said during an interview with Bloomberg Television in Singapore.
“On investment and exports, in the past, there has not been a big effect,” she said.
The minister’s comments were echoed by analysts who noted that the Indonesian economy, Southeast Asia’s largest, had remained robust despite the global economic crisis. They predicted it would continue to thrive.
The economy grew 4.4 percent in the first quarter compared to a year earlier, while neighboring Malaysia’s economy contracted 6.2 percent and Thailand’s slumped 7.1 percent. The International Monetary Fund has estimated that the economy may expand as much as 4 percent this year.
Suicide bombers struck the JW Marriott and Ritz-Carlton hotels in Kuningan, South Jakarta, on Friday, killing seven people.
Dradjad Wibowo, an economist and lawmaker, said fears of terrorism returning to Indonesia might hurt the rupiah and the stock market for a few days at most. He noted that even President Susilo Bambang Yudhoyono’s speech on Friday, in which he said he had received reports indicating the attacks might have been linked to his apparent re-election on July 8, had a minimal effect.
“As a psychological response, the rupiah and other economic indicators might depreciate slightly, but the pressure will be relatively small and temporary,” Dradjad said, citing previous post-bombing market reactions in Jakarta, London and Madrid as examples.
Purbaya Yudhi Sadewa, chief researcher at Danareksa Research Institute, also said the lasting impact would not be significant. “The blasts of course will create negative sentiment toward our capital market, but usually the impact will not last long,” Yudhi said.
He noted that only after the first Bali bombings in 2002 did the market fall sharply.
Nonetheless, Yudhi said the attacks could sour Indonesia’s investment climate, or at least make investors take a harder look at factors that otherwise might have been glossed over.
“At the moment, we do have a lot of fundamental factors that make us less inviting than neighboring countries. So if we want to improve the investment climate, we had better focus on improving our fundamental problems,” he said.