RI economy to suffer from attacks in U.S.: Experts

RI economy to suffer from attacks in U.S.: Experts

JAKARTA (JP): Experts said that Indonesia's economic recovery
could be pushed back after terrorist attack in the U.S. could
trigger a deeper global economic recession.

"The U.S. already had serious problems with the fall of the
Dow and Nasdaq indexes. Now, we have all the reasons to believe
that the U.S. is heading toward a full-fledged economic
recession, which will definitely affect negatively the world
economy including Indonesia," noted economist Sjahrir told The
Jakarta Post on Wednesday.

"The U.S. is the heart and nerve of the entire financial
system and if it comes under attack, there will be repercussions
everywhere," he said, adding that the repercussions would
definitely affect Indonesia permanently.

He said the attacks would force the U.S. to spend more on
domestic defense issues and less on international assistance and
humanitarian assistance.

"Indonesia cannot rely on outside resources, especially the
U.S., to achieve economic recovery," Sjahrir said.

Sjahrir was commenting on the impact of the devastating
terrorist suicidal attacks on the World Trade Center in New York
and other U.S. government buildings in Washington Tuesday
morning.

Although the full impact of the terrorist attack on the
economy has yet to be calculated, economists predict that unless
world central banks particularly those of developed nations take
necessary integrated measures, the world economy could tumble
into a deeper recession and even depression.

Separately, economist Bustanul Arifin of the Institute for
Development of Economics and Finance (Indef) urged the government
to consider revising its economic assumptions for the 2002 budget
year, arguing that with the U.S. now heading toward a deeper
economic recession, it becomes increasingly impossible for
Indonesia to achieve the economic targets.

Under the 2002 state budget draft, presented by the government
last week, the exchange rate is assumed at Rp 8,500 per U.S.
dollar, inflation 8 percent, economic growth of 5 percent and
international oil price of $22 per barrel.

Bank Indonesia Governor Sjahril Sabirin said that the
terrorist attack could weaken Indonesian export because the U.S.
was Indonesia's major export market.

"The attacks will have a significant impact on the global
economy including Indonesia. How bad we will be hurt, we have to
wait and see," Sjahril told reporters after attending his trial
at the South Jakarta district court.

Sjahril also said the central bank would try to find a way to
minimize the impact. He did not elaborate.

Finance Minister Boediono, however, played down the above
concern, saying that U.S. economy was strong enough to weather
the repercussions.

"I think the U.S. economy is so strong that the attacks will
not have as big an effect as we think," he said, adding that the
effects would be temporary.

Separately, State Minister for State Enterprises Laksamana
Sukardi said the terrorist attacks could be a blessing in
disguise for Indonesia "since investment in Japan and the U.S. is
slowing down, investors may be looking at China to put their
money."

"Hopefully some will also go to Indonesia," Laksamana said.

Citibank Economist Anton Gunawan said it was still too early
to tell the impact of the terrorist attacks against U.S. on
Indonesia's economy.

"The attacks would have negative impacts if U.S. banks could
not clear transactions, which will result in the downturn of
trade activities," he said.

But if "the U.S. declares an all-out war against terrorism by
increasing its defense budget, the spending would stimulate
economic growth, which in turn could boost the country's export
to U.S.," Anton told.

According to Anton, the attacks would severely affect
investors' confidence in U.S. market, and may encourage
international investors to relocate their business to other
countries including Asian nations. (tnt/03/10)