Boediono expects recovery in investment in 2004

The Jakarta Post, Jakarta

Minister of Finance Boediono said on Friday that investment activities in the country would improve significantly after the 2004 general election had been completed and a new administration is in place.

He said that many investors had delayed their investment plans due to the uncertainty before the general election.

"I think there will be a strong recovery in investment after the completion of the general election," he told reporters.

But he was still optimistic that the 4 percent economic growth target for this year could still be achieved driven by domestic consumption and recovery in exports.

He expected that the recent increase in the salary of government employees and strong growth in the agriculture sector could push up domestic consumption, which has been the primary source of economic growth in the past couple of years.

The World Bank said earlier on Thursday in its updated economic outlook for Asia, that Indonesia's economy would be negatively affected by the current outbreak of Severe Acute Respiratory Syndrome (SARS) and the recent war in Iraq.

The Bank maintained its 3.3 percent economic growth projection for Indonesia this year.

It said that positive developments in the macroeconomic indicators such as stronger exchange rate of the rupiah against the U.S. dollar, lower inflation and lower interest rates had not translated into increased investment.

Analysts have said that the weak world economy, aggravated by SARS and the effects of the Iraq war, would also affect the country's exports this year.

The central bank said in a recent report that exports during the first quarter of this year were expected to grow slightly.

It said that first quarter economic growth was expected to slow to 3.2 percent from 3.8 percent in the previous quarter as domestic consumption was also weakening.

Indonesia's economy has to grow by at least 5 percent to help ease the huge unemployment problem.