Indonesian GDP Growth only 3.6 Percent

Wednesday, 01 April, 2009 | 12:40 WIB

TEMPO Interactive, Hong Kong: The Asian Development Bank (ADB) has predicted that gross domestic product (GDP) growth in Indonesia this year will be only 3.6 percent.

This is much weaker than the economic growth of 2008, which was 6.1 percent.

The ADB's report entitled 'Asian Development Outlook 2009' that was released yesterday (31/3), mentioned that the lower growth was caused by lower Indonesian exports to countries like European Union, Japan, Korean, Singapore, and the United States.

Total exports have reduced by around 25 percent.

Two of ADB's Indonesian mission residents, Jorn Brommelhorster and Priasto Aji, explained that the schedule of fiscal stimulus implementation will significantly affect growth of the Indonesian economy.

But the state budget usually is distributed in the second half of the year.

They went on to say that lower domestic demand as well as the price of fuels and commodities cut the annual inflation to 8.6 percent in February this year.

It is expected that this trend will continue so annual inflation will decline to 6.3 percent.

This will provide room to reduce interest rate.

They suggested Indonesian government to watch number of poor people that is reduced insignificantly. It was 16.6 percent on March 2007 from only 15.4 percent on March 2006.

In addition, more than 55 percent of the Indonesian employed population have incomes of less than US$2 per day.

“Protection for poor people during the economic slow growth will be the biggest challenge for government,” they said.

The ADB is predicting that the number of unemployed this year will increase to more than nine percent because of more lay-offs within the country and abroad.

The economy growth of developing countries in Asia will also slow down to only 3.4 percent.

This is a reduction from 6.3 percent in 2008 and 9.5 percent in 2007.

RIEKA RAHADIANA | EFRI