Indonesia makes an economic recovery

[Turborama]

Source: The Australian

A decade ago Indonesia was the sick man of Asia. In 1998 its economy had collapsed, with GDP falling a massive 13 per cent. Its banking system was in disarray and a series of weak presidents struggled to cope with the aftermath of the financial crisis that had toppled long-serving president Suharto.

Today it is Susilo Bambang Yudhoyono's proud boast that his country stands alongside China and India as the only regional nations still recording positive economic growth. On current indicators, Indonesia is the stand-out performer in Southeast Asia. While its neighbours, including Thailand, Malaysia and Singapore, are all going backwards, Indonesia looks to have weathered the global financial storm.

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She (Finance Minister Sri Mulyanialso) sees the prospect of a global recovery later in 2009, but emphasises that a return to growth will depend on the policy responses adopted by the major trading nations. Here Sri Mulyani sees big challenges ahead for the Obama administration and Britain's Gordon Brown with looming debt problems created by the massive taxpayer-funded bank bailouts.

Sri Mulyani recently discussed the issue with US Treasury Secretary Tim Geithner.

"Looking at Indonesia in 97-98, it took us three years of argument on how to recapitalise the banks," she recalls, alluding to the harsh and unnecessary fiscal medicine prescribed by Washington and the IMF to Jakarta at the height of the crisis. "I said to Tim, 'you were here in Jakarta in 97-98 with Larry Summers. You asked us to carry out a lot of policy prescriptions'. So I said 'why don't you look at your notes and maybe it will help you to do the same thing in the US?"' she says disarmingly.

Read more: http://www.theaustralian.news.com.au/business/story/0,28124,25582031-36418,00.html

[grantcart]

1. Unfortunately a great deal of Indonesia's GDP increase is done at tremendous

environmental degradation. And its not a surprise that Indonesia would be alone besides India and China in growth because such a large percentage of their economy is based on providing raw material (at tremendous environmental cost) to China and India.