| Untitled Document World Bank Office Jakarta
Jakarta Stock Exchange BuildingTower 2, 12 th Floor (62-21-5299-3000) Contact :
In Banda Aceh : Ratnasari Dewi:
08126992683, rdewi@worldbank.org In Jakarta : Randy Salim:
(021) 5 299-3259, rsalim1@worldbank.org
Despite downward trend, growth in the agriculture sector and strong local consumption signals economic progress
Banda Aceh, November 13, 2008 – Joint analysis by Bank Indonesia and The World Bank on the Aceh economy shows consumption growth, a steady drop in poverty and a return to lower, pre-tsunami inflation rates. Recovery and growth in the agriculture sector also signals economic progress beyond the reconstruction effort. The latest Aceh Economic Update shows that consumption (both private and public) continues unabated, accounting already for over 50% of GDP. This is supported by anecdotal evidence of the purchase of vehicles, electricity and fuel consumption which continued to increase in 2008. Poverty continues to fall and BPS estimates that 23.5% of the population still lives below the poverty line, a marked decline from pre-tsunami poverty levels. The agricultural sector continues to recover and grew by 4.5 percent in the first semester of 2008. This was the result of the end of the conflict and investment provided through reconstruction assistance. Growth in agriculture was led by the farm-food and estates sector. For the first time since the tsunami, inflation in Aceh is lower than the national level, which rose due to the global surge in food and fuel prices. Year-on-Year inflation in Banda Aceh was 8.2 percent in August 2008, below the national level of 11.9 percent. “A reduction in inflation was expected, as demand from the reconstruction effort slows down and supply chains are restored in the province”, said Enrique Blanco Armas, World Bank economist in the Jakarta office. Unemployment remains a key challenge for policy makers in Aceh, with the official unemployment rate standing at over 9 percent, similar to the national level. Jobs were created over the last few years primarily to serve the reconstruction effort, so they are not sustainable in the long run. Safriza Sofyan, Deputy Manager of the Multi-Donor Fund for Aceh and Nias, said, “With a gradual exit of reconstruction players there might be upward pressure on unemployment as the reconstruction comes to an end. Significant private sector investment, especially in agriculture and manufacturing related to agriculture is necessary to reverse this trend”. Despite the positive growth in agriculture, much needs to be done to boost growth in Aceh’s non-oil and gas sectors, which in the first half of 2008 slowed down to 3.1 percent. Sectors linked to the reconstruction effort are showing low or negative growth rates. Meanwhile, the oil and gas sector continues to decline, as a result of the rapid depletion of gas reserves, with production declining by almost 20 percent in the first half of 2008. The Aceh Economic Update is released on a semi annual basis, as an attempt to analyze the impact of tsunami and reconstruction efforts in Aceh, based primarily on the analysis of official government statistics published by BPS and Bank Indonesia. To access these reports and read more about the World Bank’s support for Aceh’s reconstruction, visit: www.worldbank.org/id/reconstruction |
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