YOGYAKARTA – Indonesian economy in 2014 is predicted not to be getting better, says economic observer from Faculty of Economics and Business; it is because inflation is to remain high whilst the rupiah is weakening due to the ever deficit trade balance while government and private sector are trapped in short termed debt payment.
“Economic growth is predicted to decrease where deviations and fluctuations are higher. Inflation is projected at 6.5%. Rupiah stays under Rp11 thousand (against US dollar),” says Prof. Dr. Sri Adiningsih, delivering economic projections in 2014 at UGM (23/12).
Adiningsih explained in 2014 investment and manufacture are decreasing. Despite the growing consumptions, these would not help much. “Indonesian economic structure depends on consumptions and imports while the macroeconomy related to global financial condition is stagnant,” she added.
It is predicted to get even worse if the general elections would not run well. “Risks for degradation of economy is very high, if elections are not peaceful, the economy would fall down,” she says.
The professor in Faculty of Economics and Business hopes for a peaceful election. “Even if next year is a political year, it will have influence on economic development,” she added.
Sri Adiningsih says the weakening of the rupiah will continue although the Bank of Indonesia has increased the BI rate to 7.5% and rolled out two economic policies. Adiningsih fears the decreasing foreign exchange, which today stays at US$97 millions.
Another UGM economist, Prof. Dr. Insukindro, M.A., criticised the BI policy that focuses more on monetary rather than fiscal area. He saw the BI should pay attention equally to monetary and fiscal conditions in resolving economic matters.