Jakarta – Indonesians should prepare for the worst as the global economy looks set to slide further over the next few years, economists and alumni from the association of the National Resilience Institute (Lemhannas) have warned.
"The government's strategies to deal with the crisis, such as the stimulus package, are fine. However, we can only hope they can curb the wider impacts of the crisis," association chairman Agum Gumelar said after addressing a seminar on the global crisis in Jakarta on Tuesday.
He said the country might soon come face to face with the uglier side of the crisis, such as high unemployment rates, especially if employers of Indonesian migrant workers overseas are forced to layoff thousands of workers as the crisis takes hold.
Earlier this month, Indonesian Employers Association (Apindo) chairman Sofyan Wanandi said the economic downturn had driven more than 237,000 of the nation's workers to unemployment.
Rosita S. Noer from Lemhannas said that around 1.5 million workers would lose their jobs this year, bringing the country's unemployment rate to around 10.4 million.
"This total will comprise of existing jobless figures along with 222,500 newly unemployed and an additional 600,000 layoffs from jobs outside the country," she said.
Rosita said according to data from the Central Bureau of Statistics, Indonesia will actually cut the number of people living under the poverty line, from 37 million in 2007 to around 33 million in 2007. "However, the real number may actually be higher," she said.
The increased unemployment and poverty rates may also trigger an escalation in conflicts, said Agum, a retired four-star Army general and a former chief security minister. "We could be seeing a lot more riots in the next couple of years," he said.
He called on the government to pay specific attention to the banking sector, which would be hit hard by the crisis, and safeguard the country's foreign exchange supplies.
Chatib Basri, an economist from the University of Indonesia, told the seminar that the country would still benefit from domestic consumption, especially of food products. "Indonesians tend to consume rather than keep their money in banks, and 43 percent of that consumption will be spent on food products."
Furthermore, the population growth of around 1.6 percent per year would ensure a growing, albeit slow, economy, he added.
Economist Adrian TP Panggabean said the government's stimulus package, even when accompanied with low interest rates, would not be effective if the global situation continued worsening. "Banks will be worried about non-performing loans, and will therefore be reluctant to give loans," he said.
Another economist, Martin Panggabean, said that the economy this year would be saved by political parties spending huge amounts of money campaigning for public support ahead of the upcoming general elections. However, he said the country was undeniably vulnerable to the global economic woes.
"The United States will issue bonds and Indonesia will absorb some of them, and because of this the pressure the nation's assets will increase," Martin said. He said the likelihood of the country currently going into a depression was between 20 and 30 percent. (dis)