Global crisis to hit hardest next year: economists

The Jakarta Post | Fri, 10/10/2008 10:03 PM | Business

The impact of the global financial crisis will be felt the deepest next year, economists said at a discussion on Friday.
Amid a slowing global for Indonesian products, the economists said the manufacturing industry will face a pressure from a liquidity squeeze and a slump in people's purchasing power, they said.



The above condition would impose an enormous pressure on economic expansion, which they predict, would only grew four percent instead of the 6.2 percent predicted by the government earlier in the middle of the year.
"Things will get worse next year. Manufacturing industry will be weaker, and unemployment rate will soar. High cost of borrowing on housing and vehicles will hit the middle class people," said former bank commissioner Ichsanudin Noorsy.
Instead of focusing on attracting foreign investment, Ichsan advised the government to strengthen the small-scale industry while continue reducing foreign debt.
"As you know, small-scale industry absorbs 90 percent of workers, while the capital intensive industry just three to four percent," Ichsan said.
Hendri Saparni of the advisory group on economy Econit urged the governemnt to create massive jobs for the people through state-owned enterprise.
"It will boost income, and creating bigger domestic demand then turning the economic wheel," Hendri said.
The country's manufacturing industry and commodity producers, she said, could no longer rely on exports to pump up growth while warning the government to avoid making more foreign debt. (ast)