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...
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| Format: | Economic Updates and Modeling |
| Language: | English en_US |
| Published: |
Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/03/17457457/indonesia-economic-quarterly-pressures-mounting http://hdl.handle.net/10986/16614 |
| Summary: | 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. |
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