Some analysts are worried that the economic crises might spin out of control. A number of countries, including Indonesia, have started anticipating the impacts of the crises on their economy.
Megawati Soekarnoputri, chairwoman of the Indonesian Democratic Party of Struggle (PDIP), last week warned the government about the possible impacts of the economic crises in Europe and the United States on Indonesia.
"The indications of economic crisis occurring in Europe and the United States should be anticipated. Don`t say it cannot happen here just for the sake of image building," Megawati Soekarnoputri said in Jakarta, on August 17, after attending a ceremony to mark Indonesia`s 66th Independence Day at the PDIP heaquarters.
The former president urged the government to be careful and take precautionary steps in facing the global economic crisis.
A day earlier, however, President Susilo Bambang Yudhoyono expressed confidence that Indonesia would be able to overcome the impact of the ongoing global economic crisis.
"I believe that with the experience we have from the global economic crisis in 2008-2009 and through hard work as well as cooperation among us all. we can overcome the bad impact of the current economic crisis," he said.
He was optimistic that the global crisis could be overcome with hard work by all parties and correct fiscal and economic policies, things Indonesia had already proven capable of.
Regarding the current global uncertainties, the President said that they were the result of debt crises in several European countries and economic upheavals in the US which were compounded by political crises in several Middle Eastern and North African countries.
Developments in the economic sector in Europe and the US were not good news for the world but Indonesia was confident it can overcome the impact of the situation, the head of state said.
The government`s optimism was supported by economist Guntur S. Siboro who predicted that the current financial crises in the US and Europe would encourage foreign investors to shift their funds to Asia.
Thanks to its better economic growth, Asia, particularly Indonesia, would be flooded by foreign funds, and therefore Indonesia should not be worried about the financial crises in the US and Europe, he said on Tuesday (Aug 23).
Some parties were indeed worried the financial crises in the US and Europe might trigger a global economic crisis similar to that in 1997-1998, he said.
He, however, believed Indonesia`s economy would grow faster supported by the consumption, investment and export sectors.
Besides, Indonesia had no reason to worry about the crisis in the US and Europe because its exports to the two regions were not significant, he added.
Foreign investors were most likely to put their money in markets promising high profits such as Indonesia whose key interest rate was 6.75 percent, Guntur, who is also the marketing director of PT Karyamegah Adijaya, said.
The country`s growing economy was the main factor encouraging foreign investors to choose the domestic markets, he explained.
Another advantage Indonesia had was the fact that it is rich in natural resources and it can meet its own needs if its natural resources are managed properly.
He suggested that the government give incentives to boost the production of commodities such as paddy, sugar, rubber and spices, to meet domestic demand.
Bank Indonesia Governor Darmin Nasution recently expressed optimism that the country`s economy would still grow 6.6 percent this year against the backdrop of the crises in Europe and the US.
Although there had been an economic slowdown in Europe and the US that might affect exports, he believed the national economy would remain good. The country`s investment remained strong and was even the dominant factor in the economic growth, he said.
"Indeed there has been a slowdown but our economy is still growing because it is dominated by consumption and more investment. Indeed certain export-import activities have been affected but we will still be able to grow 6.6 percent," he said.
Finance Minister Agus Martowardojo recently said that although the economic crises in Europe and the US would not directly threaten the country`s economy, the country should remain alert by continuing to maintain its financial resilience and health.
He said the government had to manage its finances and debt prudently.
The government had also prepared mitigation steps to anticipate possible economic upheavals because of the crises engulfing the United States and Europe.
"The government will always keep a watchful eye on the impact (of the crises) on the global economy by taking various mitigation steps including speeding up budget spending, stabilizing the market using budget fund leftovers, and buying back state debt securities through a bond stabilization framework," acting chief of the ministry`s fiscal policy board Bambang Brodjonegoro told a press conference recently.
He said the fundamentals of the Indonesian economy were currently quite good and strong although the Jakarta composite index was still under pressure and the rupiah`s exchange rate had weakened.
The global stock exchange was weakening following worldwide concerns about the US economic slowdown and debt troubles in Europe.
As the current ASEAN Chair, President Yudhoyono recently had also praised ASEAN for having been able to demonstrate its economic resilience in the face of the ongoing global financial crises.
"The ASEAN region is predicted to grow between 5.7 percent and 6.4 percent this year, which is higher than the world average of 4.5 percent," the head of state said when giving a lecture to celebrate the 44th Anniversary of the Association of Southeast Asian Nations (ASEAN) in Jakarta on August 8, 2011. (*)
Reporter: By Fardah
Editor: Kunto Wibisono
Copyright © ANTARA 2011
