Muhamad Al-Azhari Consumer Spending Needed To Offset Decline in Exports
Household consumption - the main engine of Indonesia’s economy - needs to grow at about 3.5 percent this year to compensate for negative growth of non-oil and gas exports and slowing investment, a official from the National Development Planning Board, or Bappenas said.
Bambang Priambodo, director of macro economics planning at Bappenas, said such a level of household consumption growth was vital if Indonesia wanted to achieve about 4 percent economic growth.
“As we all know, projections for the world’s economic growth in January are worse than the previous prediction,” Bambang said.
In Bappenas’ latest forecast, it predicted non-oil and gas exports would fall 20 percent this year on a gloomier world economic outlook. The agency also forecast investment to grow at only 5 percent due to tight liquidity in the financial sector, hampering private expansion.
Bambang had said last year that the agency was still optimistic that Indonesia could grow at between 4.5 percent and 5 percent, but as the latest reading of the world’s economy revealed worse-than-expected results in January, he said “4 percent growth [for Indonesia in 2009] would be good enough, compared to other countries that may experience a contraction.”
But, he added, that level would depend on how fast the government’s Rp 73.3 trillion ($6.2 billion) fiscal stimulus package could be delivered, and in turn have a domino effect to help boost household consumption and compensate for slowing exports.
“By October we should be able to see how it goes,” Bambang said, adding that 5 percent investment growth would be supported mainly from government spending on infrastructure.
Household consumption - which is given a 61 percent weighting in GDP calculations – grew at 5.3 percent in 2008 from a year earlier. It helped Indonesia’s economy grow 6.1 percent in 2008.
Exports of non-oil and gas commodities – which comprised 78.8 percent of total exports - were recorded at $107.8 billion last year, up 17.2 percent from a year earlier, the Central Bureau of Statistics, or BPS, data showed.
Exports slowed as major overseas buyers of the country’s commodities and manufactured goods - including the United States, European nations and Japan - reduced their spending due to the global slump.
Meanwhile, Indonesia’s gross capital formation, or physical investment recorded by BPS in the country, was reported at Rp 1,369 trillion ($116.4 billion) in 2008, growing at a rate of 11.7 percent from a year earlier.
The International Monetary Fund projects global growth of 0.5 percent in 2009, according to its World Economic Outlook report in January. In October, it forecast global growth of 2.2 percent.
The WEO’s January prediction estimated US economic growth of minus 1.6 percent.
Bambang Priambodo, director of macro economics planning at Bappenas, said such a level of household consumption growth was vital if Indonesia wanted to achieve about 4 percent economic growth.
“As we all know, projections for the world’s economic growth in January are worse than the previous prediction,” Bambang said.
In Bappenas’ latest forecast, it predicted non-oil and gas exports would fall 20 percent this year on a gloomier world economic outlook. The agency also forecast investment to grow at only 5 percent due to tight liquidity in the financial sector, hampering private expansion.
Bambang had said last year that the agency was still optimistic that Indonesia could grow at between 4.5 percent and 5 percent, but as the latest reading of the world’s economy revealed worse-than-expected results in January, he said “4 percent growth [for Indonesia in 2009] would be good enough, compared to other countries that may experience a contraction.”
But, he added, that level would depend on how fast the government’s Rp 73.3 trillion ($6.2 billion) fiscal stimulus package could be delivered, and in turn have a domino effect to help boost household consumption and compensate for slowing exports.
“By October we should be able to see how it goes,” Bambang said, adding that 5 percent investment growth would be supported mainly from government spending on infrastructure.
Household consumption - which is given a 61 percent weighting in GDP calculations – grew at 5.3 percent in 2008 from a year earlier. It helped Indonesia’s economy grow 6.1 percent in 2008.
Exports of non-oil and gas commodities – which comprised 78.8 percent of total exports - were recorded at $107.8 billion last year, up 17.2 percent from a year earlier, the Central Bureau of Statistics, or BPS, data showed.
Exports slowed as major overseas buyers of the country’s commodities and manufactured goods - including the United States, European nations and Japan - reduced their spending due to the global slump.
Meanwhile, Indonesia’s gross capital formation, or physical investment recorded by BPS in the country, was reported at Rp 1,369 trillion ($116.4 billion) in 2008, growing at a rate of 11.7 percent from a year earlier.
The International Monetary Fund projects global growth of 0.5 percent in 2009, according to its World Economic Outlook report in January. In October, it forecast global growth of 2.2 percent.
The WEO’s January prediction estimated US economic growth of minus 1.6 percent.