T

he country needs quick policy responses from the government to avert a full-blown crisis reminiscent of the years 1997-1998, local think-thank Institute for Development of Economics and Finance (Indef) says.

'€œWe are not yet in crisis but our economy is already in critical condition,'€ Indef'€™s director Enny Sri Hartati told reporters in a press briefing on Wednesday.

The rupiah, which has depreciated 12 percent so far this year to break the 17-year low level of Rp 14,000 recently to become the second-worst performing currency in the region, is one alarming indicator, according to Enny.

The others are growing capital outflow and rising inflation that exceeded 9.26 percent year-on-year (yoy) in August versus the government'€™s 5 percent target this year.

Enny emphasized the continuous employee layoffs, with a labor association previously saying that the number of laidoff workers had reached 100,000.

'€œLayoffs drag down the income of the industries and weaken people'€™s purchasing power. The government should make sure that layoffs do not continue,'€ she added.

The government'€™s efforts to calm the people and market should also be followed up with actions, Enny stressed, saying: '€œ[The government] should act and not just make rhetoric. It will be dangerous if they do not act.'€

Besides criticizing the government for being too slow in handling the ongoing economic woes, Indef also lambasted the government'€™s measures for not addressing the real problem.

Another Indef researcher, Nawir Messi, said that the government'€™s plan to speed up railways, roads and toll roads infrastructure projects to stimulate growth, for example, would only work in the long run while the economy needed urgent treatment.

According to him, the government needed to restore people'€™s purchasing power by building agricultural infrastructure in rural areas and providing other labor-intensive projects so people would have new sources of income.

In its statement, Indef encourages the government to quickly launch the long-awaited economic stimulus package in the pipeline to avoid the ongoing economic slowdown from heading into crisis.

Indef'€™s recommendations released on Wednesday highlighted four measures the government needed to quickly take to prevent the economy from weakening further, namely: restoring people'€™s purchasing power, properly managing fiscal policy so that it helps create jobs and increase people'€™s spending, stabilizing the monetary sector and pushing for growth in the real sector by creating a conducive investment environment. (saf)