Indonesia Economic Quarterly, March 2013 : Pressures Mounting

Indonesia's economy continued to grow at a steady pace in the final quarter of 2012, taking full-year GDP growth to 6.2 percent. This was only a modest reduction from the 6.5 percent growth recorded in 2011, a resilient performance considering the weak global environment and unsettled financial market conditions which prevailed for much of the year. Looking ahead, Indonesia should be able to maintain a solid pace of growth, but there is no room for complacency, as a number of pressures are mounting which could move the economy off this trajectory. Global economic uncertainties remain elevated, Indonesia s investment growth has moderated and, as highlighted in the December 2012 IEQ, the quality of domestic policies is increasingly in focus, particularly in the run-up to the 2014 elections. Even if growth of 6.0 to 6.5 percent is maintained, there is a risk that, without more progress on policy reform and implementation, the opportunity could be missed to boost growth at a time when the economy is benefiting from a growing labor force and the agglomeration effects of urbanization. Future appointments to key economic policy roles, following the nomination of the Minister of Finance as the next Governor of Bank Indonesia (BI), will also frame the macroeconomic policy environment going forward. The final quarter of 2012 remained challenging for many of Indonesia s major trading partners; growth in the US and Japan was flat and the Euro Area recession deepened, though growth in China firmed. Moving into 2013, global growth remains subdued but international economic conditions have turned somewhat more supportive for growth in Indonesia. Global industrial production is increasing at a modest pace, and global trade is expanding again, with broad-based increases for developing countries exports. Commodity prices have also generally posted modest gains since December, including those of some of Indonesia s key export products like copper, rubber and palm oil. The improved global economic data, and diminishing fears over the risks of extreme adverse scenarios in the Euro area, US and China, coupled with accommodative monetary policy in most high income economies, have been broadly supportive of financial markets. Global equity markets rallied in the final two months of 2012 and have generally held these gains, with some developed country equity indices at or near record highs in nominal terms. Emerging market sovereign credit spreads have widened so far in 2013 but still remain close to their tightest levels since the global financial crisis.

Bibliographic Details

Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2013-03
Subjects:	ACCOUNTING, AGGREGATE INVESTMENT, AGRICULTURE, ANNUAL GROWTH, ASSET PRICE, BALANCE OF PAYMENTS, BALANCE OF PAYMENTS FLOWS, BALANCE SHEETS, BANK ASSETS, BANK BALANCE SHEETS, BANK INTERMEDIATION, BANK LOANS, BANKING SECTOR, BANKING SYSTEM, BID, BILL, BOND, BOND PRICES, BOND YIELD, BOND YIELDS, BORROWING COSTS, BUDGET DEFICIT, CAPITAL ADEQUACY, CAPITAL FORMATION, CAPITAL GOODS, CAPITAL GOODS IMPORTS, CAPITAL INFLOWS, COMMERCIAL BANK, COMMERCIAL BANK LENDING, COMMODITY MARKET, COMMODITY PRICE, COMMODITY PRICES, CONSENSUS FORECASTS, CONSOLIDATION, CONSUMER LOAN, CONSUMER PRICE INDEX, CONSUMERS, CONSUMPTION EXPENDITURE, CONSUMPTION LEVELS, CORE INFLATION, COUNTRY EQUITY, CREDIT GROWTH, CREDIT QUALITY, CREDIT SPREADS, CURRENCY DEPRECIATION, CURRENT ACCOUNT, CURRENT ACCOUNT BALANCE, CURRENT ACCOUNT DEFICIT, DEBT RATIO, DEBT REPAYMENTS, DEBT SUSTAINABILITY, DECENTRALIZATION, DEFLATION, DEMAND GROWTH, DEVELOPING COUNTRIES, DIRECT INVESTMENT, DISBURSEMENT, DISINFLATION, DOLLAR PRICE, DOMESTIC DEMAND, DOMESTIC DEMAND GROWTH, DOMESTIC MARKET, DRAG ON GROWTH, ECONOMIC ASSUMPTIONS, ECONOMIC CONDITIONS, ECONOMIC DEVELOPMENT, ECONOMIC DISRUPTION, ECONOMIC GROWTH, ECONOMIC OUTLOOK, EMERGING MARKET, EMERGING MARKET EQUITIES, EQUIPMENT, EQUITY INDEX, EQUITY INDICES, EQUITY MARKETS, EXCESS DEMAND, EXCHANGE RATE, EXPENDITURE, EXPENDITURES, EXPORT DIVERSIFICATION, EXPORT PERFORMANCE, EXPORT SHARE, EXPORT VOLUMES, EXPORTS, EXTERNAL DEBT, EXTERNAL DEMAND, EXTERNAL FINANCING, EXTERNAL TRADE, FINANCIAL ASSET, FINANCIAL CRISIS, FINANCIAL MARKET, FINANCIAL MARKET PARTICIPANTS, FINANCIAL MARKETS, FINANCIAL STABILITY, FINANCIAL SYSTEM, FISCAL DEFICIT, FISCAL POLICY, FISCAL POSITION, FIXED CAPITAL, FIXED INVESTMENT, FOOD PRICE, FOOD PRICES, FORECASTS, FOREIGN CURRENCY, FOREIGN CURRENCY EXPOSURE, FOREIGN CURRENCY LENDING, FOREIGN CURRENCY LOANS, FOREIGN EXCHANGE, FOREIGN INVESTMENT, FORMS OF CREDIT, GDP, GDP DEFLATOR, GDP PER CAPITA, GLOBAL ECONOMY, GLOBAL TRADE, GOVERNMENT BOND, GOVERNMENT BOND YIELDS, GOVERNMENT BONDS, GOVERNMENT BUDGET, GOVERNMENT DEBT, GOVERNMENT SPENDING, GROSS DOMESTIC PRODUCT, GROSS FIXED CAPITAL FORMATION, GROWTH PROJECTIONS, GROWTH RATE, GROWTH RATES, HEDGES, IMPERFECT SUBSTITUTES, IMPORT, IMPORT DEMAND, IMPORT GROWTH, INFLATION, INFLATION RATE, INFLATIONARY PRESSURES, INFRASTRUCTURE INVESTMENT, INTEREST RATES, INTERNATIONAL BANK, INVENTORIES, INVENTORY, INVESTMENT FLOWS, INVESTMENT INFLOWS, INVESTMENT LOANS, INVESTMENT RATIO, INVESTMENT SPENDING, INVESTOR PERCEPTIONS, LABOR FORCE, LIQUIDITY, LIVING STANDARDS, LOCAL BANKS, LOCAL CURRENCY, LOCAL GOVERNMENT, LOCAL GOVERNMENTS, MACROECONOMIC POLICY, MARKET CONDITIONS, MARKET PRICES, MONETARY POLICY, MORTGAGE, MORTGAGE INTEREST, MORTGAGE INTEREST RATES, NET EXPORTS, NON-PERFORMING LOANS, NPL, OIL DEMAND, OIL PRICE, OIL PRICES, OPPORTUNITY COST, OPPORTUNITY COSTS, OUTTURN, PORTFOLIO, PORTFOLIO INFLOWS, PORTFOLIO INVESTMENT, POTENTIAL INVESTMENT, POVERTY REDUCTION, PRICE INCREASES, PRICE INDICES, PRICE INFLATION, PRIVATE CONSUMPTION, PRIVATE INVESTMENT, PRODUCTIVITY GROWTH, PROPERTY VALUES, PRUDENTIAL REGULATION, PUBLIC INVESTMENT, PURCHASING POWER, REAL GDP, REAL INVESTMENT, REAL PROPERTY, RECESSION, REPAYMENTS, RESERVE, RESERVES, RESIDENTIAL MORTGAGE, RESIDENTIAL MORTGAGES, RETURN, SOLVENCY, STRONG CAPITAL INFLOWS, SUPPLY SIDE, SURPLUS, SUSTAINABLE GROWTH RATE, TARIFF INCREASES, TOTAL IMPORTS, TOTAL INVESTMENT, TOTAL OUTPUT, TRADE ACCOUNTS, TRADE BALANCE, TRADE BALANCES, TRADE DEFICIT, TRADE PATTERNS, TRADE POLICIES, TRADE POLICY, TRADE SURPLUS, TRADING, TRADING PARTNER, TRADING PARTNERS, TREASURY, TREASURY NOTE, TREASURY YIELD, TREASURY YIELDS, UNCERTAINTIES, UNCERTAINTY, UNEMPLOYMENT, UNEMPLOYMENT RATE, VALUATION, VALUE ADDED, WAGES, WEIGHTS, WORKING CAPITAL, WORLD PRICES, WTO,
Online Access:	http://documents.worldbank.org/curated/en/2013/03/17457457/indonesia-economic-quarterly-pressures-mounting https://hdl.handle.net/10986/16614
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