Indonesia's economy grows ten percent?
I am usually glad to hear an upbeat forecast of Indonesia's economic growth. First of all, I am tired of hearing gloomy prediction by virtually everybody that often turns out to be too pessimistic. Secondly, when the economy has yet to grow at its pre-crisis 6-7 percent growth rate, having a slight dose of optimism does not hurt. Besides, this optimism may turn into self-fulfilling prophecy.
However, when Trade Minister Mari Pangestu says that the economy may grow 10 percent next year, I am dumbstruck.
I wonder what she is talking about. Is she saying that since commodity prices is likely to be high next year, then we would increase the production of these commodities enormously -- say, by 50 percent more, or even higher?1"We think that the outlook for commodity prices is relatively high," said Indonesian Trade Minister Mari Pangestu on the sidelines of an ASEAN meeting late Wednesday. "A lot of it is being pushed by high oil prices, continued growth in China and India."
"If commodity prices outlook still favorable, we could comfortably reach 10 percent growth next year," she said.
It sounds like wishful thinking to me. If I have to guess, the probability of having the economy grows by 10 percent next year is zero. Nil.
Update: As Arya points out in his comment, BusinessWeek's journalist perhaps misquotes Mari Pangestu. She may be talk about export growth, not economic growth.
Growth, Macroeconomy 
Economics, Indonesia 
1I don't know what commodities she is referring to, but I think they are only a small part of Indonesia's GDP.
6 comments:
So, Mari thinks Indonesia’s growth could be driven to 10% only by higher commodity price? Sorry to say she is a big dreamer. Just ask her a question. How much export contribution in GDP? Where is her logic?
considering the relatively small contribution of commodities to the overall size of the economy, 10% growth is obviously a crazy figure given growth of 5-6% now.
Is she mad? That is the real question!
Arya said...
No, she's not. Mari's a serious enough trade economist to know the difference between reality and wishful thinking.
Apparently, she's talking in her capacity as trade minister -- in which case, she's talking about exports (not GDP) growth. Ten percent exports growth is reasonable indeed. 8/27/2006 06:34:30 PM
(Note: This is Arya's comment when I was migrating to Blogger Beta and somehow is not shown in the ItemPage of this post -- RAP).
If she means so, then she’s not dreaming of course. But statement like that is just rhetoric. We don’t require higher commodity price to reach 10 percent export growth.
Julian has a point there.
And, ten percent export growth is not news at all, I think.
However, commodity prices are expected to increase by more than 10%..... Therefore if the total growth is only 10%, then, the volume has a negative growth. right? which is bad isn't it?
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