Drought & Growth

Oct 31st, 2006, in Business & Economy, by

Growth prospects may be harmed by drought while some continue to worry about the lacklustre performance of the economy overall.

The co-ordinating minister for the economy, Boediono, warned on the 30th that economic growth could possibly suffer setbacks due to drought in a number of areas, noting that traditional agriculture remained an important part of the economy.

The government has this year set a target of 5.8% GDP growth. Boediono remained optimistic that this could be reached, assuming the climate problems did not worsen, and believed that by 2010 a rate of growth of at least 7% would be achieved, similar to that of pre 1997 levels.

Meanwhile Bill Guerin in the Asia Times worries that economic growth in Indonesia has failed to keep pace with the improving macro-economic fundamentals of the economy due to persistent foreign and local investor concerns about the country’s overall direction. With weaker than ideal growth comes increased unemployment and under-employment, and its consequent possibility of social unrest. Since the end of 2005 unemployment has risen 2%, to stand at a massive 11.6 million people, or 10.6% of the available labour force, with a further 43 million working less than 35 hours a week.

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