Indonesia's economy will suffer a new blow in the fourth quarter after the Bali bombings, the country's planning minister said today.

National Development Planning Minister Sri Mulyani Indrawati said Saturday's bombings would be a second blow to growth after the government more than doubled fuel prices over the weekend.

"With this bombing I think the fourth quarter will be double-hit because first we are increasing quite significantly the fuel price that may lead to an increase in inflation, (which) will maybe to some extent reduce the potential growth that we are expecting," Indrawati told reporters on the sidelines of the World Islamic Economic Forum here.

"With this Bali bomb, I think it will be reduced even more. If we are lucky I think we can still maintain 5.7 or 5.9 by the end of 2005," she said.

The official growth forecast for 2005 is 6.0 percent but Indrawati earlier this month had already predicted growth would slow to 5.8 percent for the year after rising oil prices and interest rates.

While the minister said the fourth quarter would be a "very hard quarter for us", she said fast action by the government to deal with the aftermath of the bombings would hopefully mean that "in 2006 we expect to have a normal growth."

The three bombings killed at least 26 people in Bali, just days before the third anniversary of nightclub attacks which killed 202 people on the Indonesian resort island.

Fallout less devastating

But Indrawati was hopeful the fallout for Indonesia and Bali would be less devastating this time.

"Maybe the situation now is different in the sense that the perception of the international community regarding the bombing is not that dramatic comparing to the first Bali bombing, because it could happen everywhere," she said.

"Now the perception regarding risk is that it could happen anywhere in the world and so on, so it won't really create the stigma to the country as a whole or Bali specifically in this case."

However the minister said the latest bombings had undermined government efforts to attract investors and had set back the recovery of Bali's beleaguered tourism industry.

"With this event I think it will be hard for us to really convince the international (community), especially the investors, to come up with the idea that Indonesia is indeed a safe place," she said.

Delegates to the World Islamic Economic Forum expressed shock and concern over the bombings and a minute's silence and prayers were held for the victims.