Pursuing the Economic Outlook of O-Eight

The 2008 economic outlook has been predicted by many analysts. There are optimism and also pessimism. Only time will later prove it.

The economic growth is expected to be 6,5 % due to developments outside of Java. The government�s target is 6,8 %. Development in Java Island is perceived to be in a stagnant phase already.

The world�s crude oil price could again reach sky high in 2008 (towards USD 100/barrel) therefore the government will have to increase subsidies or find other solutions to this problem. Currently, they are socializing this scheme to shift from lower octane fuel to a higher one along with the increasing price. But it is not popular to the people.

The program of shifting from kerosene to LPG is still not as the government plan yet. In many rural areas in Indonesian cities we see people queuing for kerosene for their daily cooking needs, while LPG is not well spread according to plan.

As the effect of this price increase, it would trigger inflation rate to a figure 6,8% above 4- 6 % target of the government. This means that the Central Bank Rate (BI Rate) wouldn�t get any lower than the current 8% figure. Even so, the government has a more optimistic figure of 7,5%.

The US sub prime mortgages issue is still haunting the global economy cause it will determined whether the US will step into an economic recession phase. This year (2007) alone, many investors shift their portfolio investments to high grade economy countries (Asian Markets) to gain more profit because of higher yield.

Because of the above conditions, analyst predicts that the stock market could reach an index of 3000 � 3600 as a bullish condition. Any movements of the Fed Rate has direct impact to Asian markets proven by 2007�s September decrease from 5,25% to 4,25%.

But this December after proven that that lowering did not do much to the US economy, the world markets seems to now have immunity to such policy.

The scenario that we would not want to see is the US economic recession impacts China (China�s reserves most are in USD), then later impacts the Asian markets including Indonesia.

Currently Indonesians are relying on CPO, mining goods, and the portfolio investment markets. But prices could get bad in international trading because of bargaining conditions.

The RI economic team has great responsibility to the sustainability and stability of the Indonesian economy.

Redaksi

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