REPUBLIKA.CO.ID, JAKARTA -- The Indonesian economy is considered better than Brazil, India and Turkey. Professor of Economics from New York University, Nouriel Roubini said there are seven reasons that make Indonesia better than the three countries.
The first reason is that Indonesia's economy has grown by 6 percent. Indonesia also has a diversified economy and high population.
"Policies adopted by government are market-oriented and applied with precautionary principle," Roubini said in Mandiri Investment Forum, 2013, Monday (11/11).
Roubini also considered that Indonesia's government and private debt is still low. Government and private debt amounted to 30 percent and about 25 percent of the Gross Domestic Product (GDP).
High domestic demand is seen as a driving force for Indonesian economy. All of these are supported by a strong financial system.
Policies issued by the government and Bank Indonesia (BI) is considered appropriate. Roubini said the strict policy is needed to control inflation and current account deficit (CAD).
"The fiscal deficit and the current account must be controlled. Depreciation of the exchange rate is also required to withstand external deficit," he said.
Despite government policies to slow growth, Roubini still optimistic that Indonesia can achieve 6 percent growth in the future. In order to achieve higher economic growth, Indonesia must improve infrastructure such as telecommunication and energy sector. Private investment should be encouraged in order to achieve a growth of 7 percent.
Roubini also assessed that labor demonstration, corruption, and bureaucracy is an inhibitor of economic growth in Indonesia.
"Social spending on education and infrastructure should also be improved. On other words, fuel subsidies should be reduced," he said.
Meanwhile, developing countries such as Indonesia are still wary of U.S. monetary stimulus termination (tapering). Roubini said the impact of quantitative easing will be very small in Indonesia because the country has limited foreign financing.
"The weakening of the exchange rate will also improve the current account," said Roubini. In addition, the capital and financial account in Indonesia is not affected by the rise of U.S. short and long term interest rates.
Ed: Nidia Zuraya
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