Financial Times; Dec 21, 2002
WORLD NEWS: Bali's economy avoids the worst
By Shawn Donnan in Kuta
Less than three months on from the Bali nightclub bombing, it is becoming apparent that the October 12 attacks - in which 192 people were killed - have caused less economic damage than feared to both Bali and Indonesia as a whole.
Economists initially thought the impact on tourism alone would take 0.8 per cent off Indonesia's projected economic growth rate of 4 per cent next year. "We're still very sober about the outlook," says Andrew Steer, country director for the World Bank in Indonesia. However, he adds: "The major impact on the investment climate that many people feared has not materialised."
The World Bank will not yet quantify its findings - it is still conducting a survey of hoteliers in Bali and waiting to see the net effect of a government fiscal stimulus package. But there are clear reasons for optimism.
Despite slumping 10 per cent after the bombing, the Jakarta stock exchange now ranks among the best performing equity markets in Asia this year, and the rupiah among the best performing currencies.
There have so far been few large-scale layoffs in Bali's tourism industry. Most hotels have chosen to institute temporary job-sharing arrangements instead. And there are also signs the island's export businesses in furniture, handicrafts and textiles are holding up.
More important for Indonesia's broader economy, however, the Bali bombings appear to have had little impact on private consumption, which makes up more than 70 per cent of GDP. Retail sales and consumer confidence are both holding up well.
I Gede Pitana, chairman of the Bali Tourism Authority, expects just one in five of Bali's hotel rooms to be occupied this month, despite strong bookings for Christmas. But he still thinks Bali can bounce back by March - if there is no war in Iraq.