General Election Preparation May Push Economic Growth to 6.8%

Senin, 21 Januari 2013 | 09:08

The preparation ahead of 2014 elections is projected as a factor which will encourage national economic growth to be in the range of 6.6% to 6.8% in 2013 as it triggers domestic consumption and increases production capacity in number of related sectors.Indonesian Institute of Sciences (LIPI) Economist Latif Adam said that the preparation ahead of the 2014 election will be temporarily be the one of the driving factor of Indonesian economic growth.

"The impact will be very significant although it’s only 0.2% to 0.3% difference since it can accelerate the growth from 6.3% to 6.6%," Latif told Bisnis, Sunday (01/20).

According to Latif, the political parties and leaders’ expenses for the 2014 election are potentially increasing people’s consumption and facilitating increased production capacity of certain sectors such as the garment and advertising. Moreover, the 2014 election campaign will last for 16 months.

"Let’s assume that one member of the House of Representatives candidate allocates IDR2 billion campaign funds. Not to mention another campaign funds for legislators levels I and II candidates. There will be huge amount of money supply before of the election," he said.

 He added that the increasing money supply is risk for increasing inflation. “Before the election, the inflation is usually released just above assumptions, but the unemployment is halted through government spending and efforts to maintain purchasing power, thus, driving the economic growth.”

In addition to that, government spending in preparation for the 2014 election also contributed to economic growth. In 2013 State Budget, the government allocated IDR8.1 trillion for the preparation of the 2014 election. (aph)

by Ana Noviani, Aprianto Cahyo Nugroho