AI and its Impact on the Indonesian Economy: a CGE Approach

Virus H5N1 is confirmed as the cause of AI in Indonesia as well as in other Asia countries. A possible human pandemic from AI has economic implications and may affect consumer behavior as well as other sectors such as tourist, trade and transportation. A Computable General Equilibrium (CGE) model is used to analyze the impact of the recent AI outbreak on the Indonesian macro and sectoral economy as well as on income distribution. The model is a combination of INDOF (Oktaviani, 2000), and WAYANG (Wittwer, 2002). Even though the contribution of the poultry sector is relatively small in the Indonesian economy, the AI outbreak had significant impacts at sectoral and macro levels. Government action to control AI is important if welfare is to be maintained amongst the most vulnerable groups in society.