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.
Right-wing political scientist Laura Fernandez on Sunday won Costa Rica’s presidential election by a landslide, after promising to crack down on rising violence linked to the cocaine trade. Fernandez’s nearest rival, economist Alvaro Ramos, conceded defeat as results showed the ruling party far exceeding the threshold of 40 percent needed to avoid a runoff. With 94 percent of polling stations counted, the political heir of outgoing Costa Rican President Rodrigo Chaves had captured 48.3 percent of the vote compared with Ramos’ 33.4 percent, the Supreme Electoral Tribunal said. As soon as the first results were announced, members of Fernandez’s Sovereign People’s Party
EMERGING FIELDS: The Chinese president said that the two countries would explore cooperation in green technology, the digital economy and artificial intelligence Chinese President Xi Jinping (習近平) yesterday called for an “equal and orderly multipolar world” in the face of “unilateral bullying,” in an apparent jab at the US. Xi was speaking during talks in Beijing with Uruguayan President Yamandu Orsi, the first South American leader to visit China since US special forces captured then-Venezuelan president Nicolas Maduro last month — an operation that Beijing condemned as a violation of sovereignty. Orsi follows a slew of leaders to have visited China seeking to boost ties with the world’s second-largest economy to hedge against US President Donald Trump’s increasingly unpredictable administration. “The international situation is fraught
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) plans to make advanced 3-nanometer chips in Japan, stepping up its semiconductor manufacturing roadmap in the country in a triumph for Japanese Prime Minister Sanae Takaichi’s technology ambitions. TSMC is to adopt cutting-edge technology for its second wafer fab in Kumamoto, company chairman C.C. Wei (魏哲家) said yesterday. That is an upgrade from an original blueprint to produce 7-nanometer chips by late next year, people familiar with the matter said. TSMC began mass production at its first plant in Japan’s Kumamoto in late 2024. Its second fab, which is still under construction, was originally focused on
GROWING AMBITIONS: The scale and tempo of the operations show that the Strait has become the core theater for China to expand its security interests, the report said Chinese military aircraft incursions around Taiwan have surged nearly 15-fold over the past five years, according to a report released yesterday by the Democratic Progressive Party’s (DPP) Department of China Affairs. Sorties in the Taiwan Strait were previously irregular, totaling 380 in 2020, but have since evolved into routine operations, the report showed. “This demonstrates that the Taiwan Strait has become both the starting point and testing ground for Beijing’s expansionist ambitions,” it said. Driven by military expansionism, China is systematically pursuing actions aimed at altering the regional “status quo,” the department said, adding that Taiwan represents the most critical link in China’s
RSS