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Friday, July 17, 2009

Indonesia economy not effected on bombing tragedy

Indonesia’s economy is resilient enough to withstand yesterday’s bomb attacks on the Ritz Carlton and JW Marriott hotels in Jakarta, economists said.
“Terrorist threats in Indonesia are nothing new,” said Johanna Chua, head of Asian economic research at Citigroup Inc. in Hong Kong. “The economic impact will likely be limited.”
A decade of continuous expansion in Indonesia hasn’t been interrupted by six major terrorist bombings since October 2002 as the assaults have done little to harm consumer spending, which accounts for almost two-thirds of the economy. Fitch Ratings said an “isolated incident” wouldn’t impact the nation’s credit outlook.
“As tragic as it is, this isn’t a macro-policy-changing event,” Richard Grace, chief currency strategist at Commonwealth Bank of Australia in Sydney, said of yesterday’s attacks. “I think it’s got a short-term impact.”

Indonesia’s $433 billion economy, the largest in Southeast Asia, grew 4.4 percent in the first quarter from a year earlier, compared with a 6.2 percent contraction for Malaysia and Thailand’s 7.1 percent slump.

Growth could accelerate to “significantly” more than 7 percent if President Susilo Bambang Yudhoyono fulfils his pledge to fix the nation’s congested roads, neglected ports and ageing power plants, according to Joachim von Amsberg, the World Bank’s representative in Jakarta.

The rupiah declined the most in three weeks and stocks dropped after the bombings in the nation’s capital, which killed eight people and injured at least 53 others. The currency slid as much as 1 percent to 10,223 per dollar and the Jakarta Composite Index of shares slumped as much as 2.7 percent.
The bombings in Jakarta don’t represent a credit risk for Indonesia, said James McCormack, head of Asian sovereign ratings at Fitch Ratings in Hong Kong. The nation had foreign-currency reserves of $57.6 billion at the end of June, near the highest since July 2008.

Source - Bloomberg


The economy of Indonesia maybe not effect much on this tragedy. But for long term, it will effect investor and tourist. The chaos happen will make their income from foreign decreased . I hope that Indonesian government take action about this terrorist tragedy. It will effect their economy soon.

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