Indonesia's economic growth this year may fall short of the IMF's 3.5 percent forecast because of the spread of a deadly virus and weakening consumer confidence, the fund's country director said.
The virus outbreak's "implications for the economy and signs of weaker domestic consumer confidence need to be assessed," David Nellor said in an interview, referring to severe acute respiratory syndrome, or SARS, that has taken at least 119 lives worldwide, mostly in Asia.
The IMF last week said growth in Indonesia, southeast Asia's biggest economy, may slow to 3.5 percent from last year's 3.7 percent. That's a third short of the pace international donors say is needed to create jobs for 40 million unemployed. Nellor said slowing inflation might give Jakarta room to spur growth by trimming interest rates.
"The stability of the rupiah and the significant decline in inflation has enabled the central bank to lower interest rates," Nellor said. "The prospects for further easing need to be assessed on the basis of future inflation performance."
Indonesia reported its first case of SARS on Friday. The disease, which has curbed travel in Asia and threatens to trim growth in Singapore and Hong Kong, comes at a bad time for Indonesia.
Consumer confidence fell to a record in February as Indonesians grew concerned about jobs and shrinking disposable income, Danareksa Research Institute said, after the government raised fuel and electricity rates. Consumer spending accounts for three-quarters of Indonesia's economy.
While it is too early to say for certain that weakening consumer confidence will reduce spending, "we need to look at this," Nellor said.
Foreign investment approvals in 2002 shrank 35 percent to nine-year lows, and a terrorist attack on Bali island in October that killed at least 202 people has scared away tourists.
Tourism earned US$4.3 billion in foreign currency last year, a fifth less than in 2001.
Nellor said an export recovery -- non-oil exports rose 7.1 percent in February from a year ago -- may help growth.
"With some improvement in the world economy, we hope that exports, which have shown signs of recovery, will contribute to growth," he said.
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue
RULES BROKEN: The MAC warned Chinese not to say anything that would be harmful to the autonomous status of Taiwan or undermine its sovereignty A Chinese couple accused of disrupting a pro-democracy event in Taipei organized by Hong Kong residents has been deported, the National Immigration Agency said in a statement yesterday afternoon. A Chinese man, surnamed Yao (姚), and his wife were escorted by immigration officials to Taiwan Taoyuan International Airport, where they boarded a flight to China before noon yesterday, the agency said. The agency said that it had annulled the couple’s entry permits, citing alleged contraventions of the Regulations Governing the Approval of Entry of People of the Mainland Area into the Taiwan Area (大陸地區人民進入台灣地區許可辦法). The couple applied to visit a family member in
RSS