The recent meeting of the G20 grouping of the world’s largest economies praises Indonesia’s “good economic growth and fundamentals” amid the worsening global economic conditions.
“In other emerging economies with rapid growth, there is potential of overheating due to spiking inflation. In Indonesia, inflation remains manageable,” said Finance Minister Agus Martowardojo, who attended the G20 finance ministers and central bank governors meeting on Oct. 13-14 in Paris, France. “So, generally, we’re ready to tackle the global economic slowdown without reducing our preemptive efforts,” he said on Monday.
Indonesia’s inflation continued sliding to 4.61 percent in September, with stable economic growth of 6.5 percent in the first half of this year, while the projected public debt and state budget deficit for 2011 remained low at 26 percent and 2.1 percent, respectively, of the country’s GDP.
The overheating concern among emerging economies was included in the points among the “five early warning signals” that the G20 laid out to indicate a further slump in the global economy, which could drop to as low as 1 percent if the indicators were correct, Agus said.
The first signal was “intensification of risks in Europe”, as indicated by agreements on European nations’ rescue programs, which include management of fiscal, banking, liquidity and political elements.
“The second signal is the economic slowdown in the United States, its public debt, household debt and fiscal and sub-prime mortgage woes that have yet to end,” said Agus.
The third signal, he said, was the possibility of “global sovereign debt shock” or a correction in global bond prices, which could also affect Indonesia’s bond market. The fourth signal was the overheating in emerging economies, and the fifth signal was risks in the Middle Eastern economic stabilization, Agus added.
With these signals in view, the G20 believes the global economic growth could slide back to 1 percent from an earlier forecast of 4 percent.
“Generally, global conditions continue to show signs of correction,” Agus said, adding that the G20 finance ministers and central bank governors meeting confirmed this.
Last month, the International Monetary Fund (IMF) downgraded global economic growth to 4 percent from the previous 4.4 percent, as world trade was expected to slow on slowing demand from rich countries given their economic woes.
“Indonesia’s growth has been robust and driven by domestic factors,” lead World Bank economist for Indonesia Shubham Chaudhuri said. “In that case, Indonesia is well placed to weather external shocks to trade channels. Indonesia’s diverse export destination will help.”
Results of G20 meeting in Paris on Oct. 13-14
1. Global conditions are worse than three weeks ago when the world’s largest financial and monetary leaders met in Washington, DC
2. Five early warning signs to watch for further slump in global economy: conditions in Europe, conditions in the US, global sovereign debt, overheating in emerging economies and conditions in the Middle East
3. Financial transaction tax that requires financial transactions (in banks, stocks and bonds) to be taxed. Indonesia opposes the plan as it is still developing its banking intermediary function and retail investors’ interest in investing in debt and capital markets
4. More regional financial arrangements similar to the Chiang Mai Initiative Multilateralization and European Financial Stability Facility
5. Additional capital for the IMF after it bailed out Greece. The agency will need more funding to rescue other European nations plagued with debt troubles
6. Other topics: energy and food security, climate change mitigation, financial regulation, international monetary systems
Source: www.thejakartapost.com
“In other emerging economies with rapid growth, there is potential of overheating due to spiking inflation. In Indonesia, inflation remains manageable,” said Finance Minister Agus Martowardojo, who attended the G20 finance ministers and central bank governors meeting on Oct. 13-14 in Paris, France. “So, generally, we’re ready to tackle the global economic slowdown without reducing our preemptive efforts,” he said on Monday.
Indonesia’s inflation continued sliding to 4.61 percent in September, with stable economic growth of 6.5 percent in the first half of this year, while the projected public debt and state budget deficit for 2011 remained low at 26 percent and 2.1 percent, respectively, of the country’s GDP.
The overheating concern among emerging economies was included in the points among the “five early warning signals” that the G20 laid out to indicate a further slump in the global economy, which could drop to as low as 1 percent if the indicators were correct, Agus said.
The first signal was “intensification of risks in Europe”, as indicated by agreements on European nations’ rescue programs, which include management of fiscal, banking, liquidity and political elements.
“The second signal is the economic slowdown in the United States, its public debt, household debt and fiscal and sub-prime mortgage woes that have yet to end,” said Agus.
The third signal, he said, was the possibility of “global sovereign debt shock” or a correction in global bond prices, which could also affect Indonesia’s bond market. The fourth signal was the overheating in emerging economies, and the fifth signal was risks in the Middle Eastern economic stabilization, Agus added.
With these signals in view, the G20 believes the global economic growth could slide back to 1 percent from an earlier forecast of 4 percent.
“Generally, global conditions continue to show signs of correction,” Agus said, adding that the G20 finance ministers and central bank governors meeting confirmed this.
Last month, the International Monetary Fund (IMF) downgraded global economic growth to 4 percent from the previous 4.4 percent, as world trade was expected to slow on slowing demand from rich countries given their economic woes.
“Indonesia’s growth has been robust and driven by domestic factors,” lead World Bank economist for Indonesia Shubham Chaudhuri said. “In that case, Indonesia is well placed to weather external shocks to trade channels. Indonesia’s diverse export destination will help.”
Results of G20 meeting in Paris on Oct. 13-14
1. Global conditions are worse than three weeks ago when the world’s largest financial and monetary leaders met in Washington, DC
2. Five early warning signs to watch for further slump in global economy: conditions in Europe, conditions in the US, global sovereign debt, overheating in emerging economies and conditions in the Middle East
3. Financial transaction tax that requires financial transactions (in banks, stocks and bonds) to be taxed. Indonesia opposes the plan as it is still developing its banking intermediary function and retail investors’ interest in investing in debt and capital markets
4. More regional financial arrangements similar to the Chiang Mai Initiative Multilateralization and European Financial Stability Facility
5. Additional capital for the IMF after it bailed out Greece. The agency will need more funding to rescue other European nations plagued with debt troubles
6. Other topics: energy and food security, climate change mitigation, financial regulation, international monetary systems
Source: www.thejakartapost.com
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