Jakarta (Antara Bali) - Indonesia is still well away from the brink of economic crisis despite the falling value of rupiah, a leading Indonesian economist said.
"If we look at the figures it is close . At that time rupiah traded at 15,000 per US dollar, and now it is around 13,400. However, the situation is much different," Tony said here on Thursday night.
Indonesia is not yet on the brink of the kind of monetary crisis befalling the country in 1998, head of the Economic and Public Policy Study Center of the state Gajah Mada University of Yogyakarta, Tony Prasetiantono said.
In 1998, the country's inflation soared at 78 percent triggering run on bank forcing Bank Indonesia to print large amount of new bank notes, he recalled.
Now the inflation year-on-year is only 7.15 percent much lower than in 1998, he said.
In addition, he went on to say, the interest rate on deposits in 1998 was 60 to 70 percent as against credit interest rate of only 24 percent.
Wide negative spread resulted in banks collapsing including large state banks, he said, adding, now, no bank has collapsed.
"The condition in 1998 was much worse and disastrous," he said.
He said the comparison is based on objective factors including interest rate , inflation and healthiness of bank.
In addition, political situation in 1998 was 'very much not stable' with most people wanting a change in the president, he said, adding, "now no one wants to replace the president at least until 2019."
He said the rupiah weakening was also attributable to improved condition of the US economy, apart from the structural factor and market sentiment.
"The US (economic)improvement is like a giant just awakes as indicated by the creation of 200,000-300,000 new jobs and unemployment rate falling from 10 percent to 5.5 percent. In addition, car sales year-on-year was 17 million units as against only 1.1 million units in Indonesia," he said.
He predicted the country's economy would improve to grow 5.1-5.2 percent in the second half of this year from only 4.7 percent in the first quarter.
He also predicted that bank credits would grow around 10-12 percent this year. (WDY)
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