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2009 looking up despite crisis
Wasti Atmodjo , The Jakarta Post , Denpasar | Tue, 11/18/2008 12:37 PM | Bali
Bali's economic growth could rebound by more than six percent by the end of next year due to the planned reduction in fuel prices and strong partnership with the private sector, experts say.
According to data from Bali chapter of the Central Bank (BI), Denpasar's economy grew by 5.5 percent from January to September this year, with the Central Bank expecting a slight slump in growth to 5.9 percent by the end of the year -- largely because of rising inflation.
However, the economy could grow beyond the 6 percent mark next year in lieu of the planned fuel price cuts, which could reduce production costs and increase purchasing power, Bali BI chief Viraguna Bagoes Oka said on Monday
The government announced on Friday it would reduce the price of fuels for industry by an average 14.58 percent due to a decrease in the Mid Oil Platts Singapore (MOPS) fuel prices, the government's benchmark in dictating fuel-related policies.
"The reduction in prices of Premium and Pertamax are no guarantee that production costs will go down and purchasing power will go up, but it can do no harm to our economy," Viraguna said on Monday.
"We have to be optimistic that we can attain 6 percent economic growth by the end of next year," he said.
Bali's economy has been stable, he said, with inflation remaining below the national average since 2005. As of September this year, the island's year-on-year inflation was 9.28 percent, compared to the national average 12.14 percent.
Viraguna warned, however, that inflation tended to rise at the end of each year.
"This is certainly a cause for concern and we need to anticipate this and not allow the rate to go any higher," he said.
"We hope that having the Coordinating Team for Regional Inflation Supervision (TKPID) in Bali will support this goal."
One of TKPID's members, Putu Subagiartha (also head of the Bali's Regional Development Planning Agency), said the team was formed to prevent further increases in the inflation rate, which the regional government falsely predicted to remain at a low 6.6 percent earlier in April.
"One of the reasons behind the high inflation rate now was the skyrocketing fuel prices that led to a slower production rate," Putu said.
"The subprime mortgage crisis in the U.S., the impact of which is only being felt now, also contributed to the inflation rate."
