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IMF cuts growth, RI upbeat
The cut in the global growth forecast confirms that 2009 will be difficult, yet Indonesia remains optimistic the economy can expand as targeted
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The cut in the global growth forecast confirms that 2009 will be difficult, yet Indonesia remains optimistic the economy can expand as targeted.
The International Monetary Fund (IMF) has just slashed its global growth forecast from 0.5 percent in January to minus 1.3 percent, in Washington on Wednesday, urging governments worldwide to take action in lifting the world economy from a deep recession.
"*The projection* is still within our range. It's not surprising, only confirming that 2009 will be a difficult year," Finance Minister Sri Mulyani Indrawati said Thursday.
She added the IMF's projections showed the world's economic growth engines were going through a contraction this year.
The IMF said the US remained the epicenter of the global financial crisis, and might contract 2.8 percent this year. In Asia, Japan is predicted to have a deeper-than-expected recession, while China will have far slower growth than last year.
But Indonesia's economy can still expand between 4 percent and 4.5 percent this year, as expected by the government, depending on the government's policy responses, said Mulyani.
"Now our policy response will become more important," she said, without elaborating.
The government has provided a Rp 73.3 trillion (US$6.63 billion) stimulus package this year, Rp 12.2 trillion of which to be allocated for infrastructure projects to spur growth - in addition to funds already allocated for infrastructure projects in the 2009 state budget.
In the first quarter, the economy is estimated to expand 4.5 percent due to strong consumption, according to the Finance Ministry. But it is predicted to slump in the second and third quarters, then pick up the pace again in the fourth quarter.
There is "a chance for a recovery to start in the second half" this year depending on global sentiment, Mulyani said Wednesday, adding the economy could expand between 5 percent and 6 percent in 2010.
The IMF said global growth might climb up to 1.9 percent next year, but it would depend on governments' measures toward the crisis.
Mandiri Sekuritas chief economist Destry Damayanti said if the government remained consistent with its policy responses, including the fiscal stimulus and tax cuts, the economy might expand between 4 percent and 4.5 percent as targeted.
"The government has taken in consideration the downside risk of worsening global economic conditions," she said.
"We also have a strong domestic market, so our economy can remain resilient despite the global economy worsening."
Toward the second half, the government should watch global developments, the stimulus disbursement and political stability ahead of the presidential election, to maintain growth, she added.
Citi analysts forecast the global economy will start recovering late this year or early next year, due to a slowing pace of contraction in the global economy and a better tone to financial markets.
