D

espite the ongoing global economic crisis affecting Europe and the US, experts and businesspeople agree that the resort island will experience positive economic growth this year.

The island’s success in hosting the ASEAN Summit in November and the ongoing improvements in local infrastructure, including the expansion of Ngurah Rai Airport, are expected to play a crucial role in boosting tourism, which for decades has been the island’s economic backbone.

The head of the Denpasar office of Bank Indonesia, Jeffry Kairupan, conceded that the floundering global economy did not provide the best setting for either the real sector or government financial policy.

However, he believed that Bali was still likely to enjoy a positive economic climate. Last year’s credit expansion is one parameter that could be used to forecast this year’s economic growth. In 2011, banks pumped a total of Rp 30.576 trillion worth of credit into the island’s private sector, a significant 23.13 percent increase from the previous year.

“We will keep pushing the banks to channel more credit, including to local small and medium enterprises,” he said.

He predicted that the island would book economic growth of 6.5 percent in 2012. Strong investment flow from the central government and the private sector will be one of the influential factors driving the growth.

“In 2011, the dynamics of the local economic were quite good and tourism, the biggest contributor to the island’s economy, booked solid performance with the number of foreign visitors growing 10.57 percent. This favorable condition will continue in 2012,” he added.

The reduction in the island’s exports could be compensated for by developing new markets in the Middle East. Europe, Japan and the United States are traditional markets for the island’s export commodities. When the economic crisis hit these traditional markets, the volume and value of the island’s exports dropped significantly. In 2011, exports generated more than US$497 million,
a 4.24 percent decrease from the value recorded in 2010.

“Bali needs to open domestic markets to absorb its commodities,” tourism figure Bagus Sudibya stated, adding that the island’s economic was heavily influenced by the performance of the tourist industry.

“The number of visitors from Europe and the United States has increased, a reminder that financial crises do not always affect tourism.”

Yet, he warned local tourism players not to be complacent due to last year’s achievement. Promotional campaigns must be extended to every market available on the global stage.

“Promotional campaigns should not be directed at the traditional primary markets only. Bali should seriously target Russia, Canada and India,” he said.

Despite the financial crisis gripping their nation since 2008, American visitors still take long-haul flights to vacation on Bali. In 2011, the number of American visitors reached 90,154, a 24.96 percent increase from the number recorded in the previous year.