India and China Support Indonesia’s Growth
Wednesday, 12 December, 2007 | 14:15 WIB

Tempo Interactive, Jakarta: Finance Minister Sri Mulyani has stated that targeted national economic growth next year could still be above 6.8 percent despite the sluggishness of both global and United States economic growth.

National economic growth, she said, could still be assisted by the high export demand from India, China and other countries in the Asian region.

“China’s and India’s economic growth will be strong and this will advance economic growth in Asian region,” she said, as quoted by Bloomberg via Google, in Jakarta yesterday (11/12).

With the support from India and China, she said, the government can still hope that 2008 economic growth could be above 6.8 percent.

In the 2008 State Budget, the government is targeting economic growth of 6.8 percent, with inflation set at six percent.

However, during a cabinet session on November 28, the government predicted that economic growth may be missed if global oil prices are more than US$100 per barrel.

With oil prices assumed to be at this level, economic growth will only reach between 6.4 and 6.7 percent.

The United States is Indonesia’s second largest export destination after Japan.

Exports of Indonesia’s non-oil and gas products to the US may reach US$9.4 billion up until the end of 2007.

Meanwhile, non-oil and gas exports to Japan may reach US$11.3 billion and exports to China US$5.43 billion, in the same period.

However, US economic growth is predicted to decline and affect Japan’s economic growth, so Indonesia’s exports to Japan may also go down.

HSBC Holdings Plc.’s economist in Singapore, Prakriti Sofat, predicted that Indonesia’s economic growth next year will slow down to 5.5 percent, lower than this year’s 6.4 percent.

However, according to PT Mandiri Sekuritas’ economist, Aldian Taloputra, an increase in exports to other countries, especially China, can minimize the effect of a recession in the US.

“We’ll see the trend (of exports to other countries),” he said.

According to Sri Mulyani, Indonesia needs to pay attention to the effects of US’ sluggish economic growth in the first semester of 2008.

The government make efforts to anticipate this by stepping up budget absorption for infrastructure and labor-intensive projects.

The government will also improve regulations in order to attract local and foreign investment.

Bloomberg | padjar iswara
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