THE JAKARTA POST/JAKARTA

Jakarta, October 25, 2011 – Renowned American economist Nouriel Roubini said on Monday that the Indonesian economy had a better chance of sustainability amid the eurozone and US economic crises than China because Indonesian production was not export-based.

“Indonesia has a more balanced economy because production does not depend solely on the global market but also on the domestic market,” Roubini said during his lecture titled ‘Global Economic Challenge and Its Impact on Indonesia’ at the Investment Coordinating Board (BKPM) office.

“China has been successful for a while but now its strategy is being challenged,” he said, adding that exports accounted for 70 percent of China’s gross domestic product (GDP).

“Some other countries in the Asian region have experienced more sustainable and more balanced economic growth because they rely on strong domestic demand,” said Roubini, who has earned the nickname “Dr. Doom” in the media due to hic critical economic views.

Although exports are important for economic growth, Roubini said that Indonesia should also maintain strong domestic demand starting with consumption.

Therefore, when a global economic crisis affected advanced markets such as Europe and the US – the main importers of Asian products – domestic production could still guarantee economic growth.

“Countries like India or Indonesia and other countries within Asia have domestic consumption of between 50 to 60 percent of GDP,” Roubini said, adding that these economies were strong and resilient.

He said that Indonesia’s large population, at around 240 million people, had greatly contributed to sustainable economic growth.

Trade Minister Gita Wirjawan, who also attended the lecture, said that Indonesia’s economic structure was different from China’s and was less vulnerable to fall out from current economic crisis in Europe and the US.

“China’s economy is export-based, while our economy is based on domestic consumption,” he said.

He said that the export target this year was US$ 200 billion. “We know however that it will not be easy to reach that target,” Gita added.

During the lecture, Roubini also said that there was a 50 percent chance of recession in the US, the UK and eurozone economies in the next 12 months.

According to Roubini, Europe’s “financial engineering” was insufficient to end its debt crisis. He said that contagion from debt crisis had spread to some French and Belgium banks. (fem)