Single digit inflation still possible: BPS
Single digit inflation still possible: BPS
JAKARTA (JP): Although year-on-year inflation has been running
at double digit rates since March, ending the year with an
inflation rate of below 10 percent was still possible on the back
of lower inflation expected for September and October, the
Central Bureau of Statistics (BPS) said.
The BPS said on Monday that the consumer price index for
September and October should be lower so as to produce single
digit inflation by the year's end.
By guaranteeing the supply of goods and services, the
government could slow down the inflation rate during these two
months, BPS chief Sudarti Surbakti said.
"The chances are slim, but reaching single digit inflation is
still possible," she said during a hearing with the House of
Representatives' Commission IX for financial affairs.
The government has targeted an inflation rate of 9.3 percent
for this year.
Hopes for single digit inflation hinged on the September and
October rates, as seasonal factors would drive inflation up in
November and December, Sudarti said.
In August, the economy saw a drop in inflation of 0.21
percent, the first such drop since September last year.
Sudarti said a similar fall in inflation in September was
unlikely.
She cited a weakening rupiah and the lingering impact of
higher electricity charges as being behind inflationary pressure
this month.
Although the rupiah had strengthened since the new government
took office in late July, the pressure of foreign debt repayments
is weighing heavily on the local unit.
On Indonesia's Gross Domestic Product (GDP) growth, BPS deputy
chief Kusmadi Saleh said a rate of 3.5 percent for this year was
reasonable, despite concerns of a slowing export market in the
U.S.
The U.S. economy is edging closer to recession after the
recent terrorist attacks on New York and Washington.
The United States remains for Indonesia, as for most other
countries, the largest single export market.
A further plunge in the U.S. market could send the global
economy spiraling into recession, thus hampering Indonesia's
export growth.
But Kusmadi Saleh said that with first semester GDP growth of
3.37 percent, he was confident Indonesia's economy could make it
to 3.5 percent.
About 60 percent of the country's economy is driven by small
and midsize industries, according to Kusmadi.
Since the 1997 economic crisis, small and midsize industries
have assumed a greater role in the economy, he explained.
"Growth in this sector (small and midsize industries) reached
between 3 percent and 4 percent compared to last year," he said.
Meanwhile, the government has estimated that the state budget
in the second semester of this year will book a lower deficit of
US$2.71 billion as against $5.07 billion in the first semester.
State Minister for National Development Kwik Kian Gie said the
lower deficit would be the result of a surplus of foreign aid
over the outflow of foreign debt repayments.
For the second half of this year, the government has estimated
an inflow of $2.81 billion in aid against an outflow of $1.45
billion in debt principle payments.
Also, Indonesia's improved political situation would mitigate
the outflow of private capital, he added.
Kwik estimated a lower capital outflow of $4.07 billion
compared to $4.98 billion during the first semester.
He further said it was too early to say whether the terrorist
attack on the U.S. would send the global economy into recession,
and thus hamper new investment inflows.
"There are too many uncertainties. People are not sure where
the world economy is heading," he told reporters after a hearing
with the House budget commission.(bkm)