The central government of Indonesia and Commission XI within Indonesia's House of Representatives (DPR) agreed to set the nation's economic growth target at 5.1 percent (y/y) in the draft state budget for 2017. This target is 0.2 percentage points below the GDP growth target that was mentioned by Indonesian President Joko Widodo in a speech last month (based on a financial note) and is also below the 5.2 GDP growth target that was set in the Revised 2016 State Budget. Less optimistic forecasts are especially caused by a cut in government spending.

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According to Indonesian Finance Minister Sri Mulyani Indrawati the economy of Indonesia will grow 5.1 percent (y/y) in 2016, slightly below the target that was set by the central government in the 2016 State Budget (5.2 percent y/y). This slightly less rosy view is caused by the decision to cut government spending by IDR 137.6 trillion (approx. USD $10.4 billion) this year in order to combat a widening budget deficit (that is mainly caused by weaker-than-targeted tax revenue). A cut in state spending means that the government has less funds to boost economic growth.

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At the latest policy meeting, Indonesia's central bank (Bank Indonesia) not only adopted a new benchmark monetary tool (the BI seven-day reverse repo rate) but also announced that it cut its forecast for economic growth in 2016. Earlier, Bank Indonesia estimated Indonesia's GDP growth in full-year 2016 in the range of 5.0 - 5.4 percent (y/y). However, it slightly cut its projection to the range of 4.9 - 5.3 percent (y/y) due to the government's decision to curtail expenditure by IDR 133.8 trillion (approx. USD $10.1 billion).

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There is plenty of room for optimism about the direction of Indonesia's economic growth this year. Indonesia's Statistics Agency (BPS) announced on Friday (05/08) that the economy of Southeast Asia's largest economy expanded by 5.18 percent (y/y) in the second quarter of 2016, a figure that exceeded all expectations and forms a remarkable jump from the 4.66 percent (y/y) GDP growth figure in Q2-2015 and 4.91 percent (y/y) in Q1-2016. As a result, Indonesia's benchmark Jakarta Composite Index is currently near record levels.

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Indonesia's gross domestic product (GDP) grew 5.18 percent (y/y) in the second quarter of 2016, beating analysts' forecasts and accelerating strongly from the (downward revised) 4.91 percent (y/y) GDP growth pace that was recorded in the preceding quarter. Data from Indonesia's Statistics Agency (BPS), released this morning (05/08), also show that on a quarterly non-seasonally adjusted basis, Indonesia's GDP expanded by 4.02 percent in Q2-2016.

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In today's cabinet reshuffle (27/07) economist Sri Mulyani Indrawati was appointed as Indonesia's new finance minister, replacing Bambang Brodjonegoro. One day earlier, when few were aware about this surprise move, Sri Mulyani spoke briefly to reporters - in her position as managing director and chief operating officer of the World Bank - about the Indonesian and global economy. She sees two matters that negatively affect Indonesia's economic growth: slowing economic growth in China and the Brexit issue.

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The central bank of Indonesia (Bank Indonesia) expects Indonesia's economic growth to reach between 4.9 and 5.0 percent (y/y) in the second quarter of 2016, only rising slightly from GDP growth realization of 4.92 percent in the first quarter. Growth is forecast to remain subdued as Indonesia's household consumption has not improved markedly yet (reflected by low demand for credit). Meanwhile, the global economic context remains plagued by uncertainties, particularly ongoing concern about the economies of the USA, China and Europe.

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The central bank of Indonesia (Bank Indonesia) expects Indonesia's economic growth in the second quarter of 2016 to improve slightly to 4.9 - 5.0 percent (y/y) compared to the 4.92 percent (y/y) GDP growth realization in the first quarter of the year. Regarding growth in full-year 2016, Bank Indonesia remains optimistic that a 5.4 percent growth pace can be achieved supported by a looser monetary policy (that should boost demand for credit). Bank Indonesia cut its key interest rate (BI rate) by 0.25 percentage point to 6.50 percent in the June policy meeting.

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The World Bank released the June 2016 edition of its Indonesia Economic Quarterly (IEQ) report on Monday (20/06). Recently, the Washington-based institution took a rigorous step by downgrading its 2016 global economic growth forecast from 2.9 percent (y/y) to 2.4 percent (y/y). This is a significant downgrade that was primarily due to the weak performance of commodity exporters. Despite this downgrade the World Bank still sees a resilient Indonesian economy, reflected by a GDP growth forecast of 5.1 percent (y/y) in 2016 and 5.3 percent (y/y) in 2017.

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In line with expectations, the government of Indonesia revised down its economic growth target in 2016 from 5.3 percent (y/y) to 5.1 percent (y/y) amid subdued private consumption, slower-than-expected private investment, and low commodity prices. Meanwhile, the World Bank also cut its forecast for Indonesia's economic growth in 2016 to 5.1 percent (y/y), down from its earlier prediction of 5.3 percent (y/y). The World Bank also slashed its outlook for global growth from 2.9 percent (y/y) to 2.4 percent (y/y) this year.

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Indonesian Finance Minister Chatib Basri said that the lower pace of economic growth in China, the world’s second-largest economy, is a major concern for Indonesia as it leads to declining demand for commodities (and thus places downward pressure on commodity prices). As Indonesia is a major commodity exporter - such as coal, crude palm oil, nickel ore and tin - the country feels the impact of weak global demand for commodities. About 60 percent of Indonesia’s exports are commodities, mostly raw ones.

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Indonesia’s House of Representatives (DPR) approved the 2015 State Budget on Monday (29/09) that was proposed by the outgoing President Susilo Bambang Yudhoyono administration. The budget deficit is now set at IDR 245.9 trillion (USD $20.5 billion), equivalent to 2.21 percent of gross domestic product (GDP), and lower than the 2.32 percent of GDP proposed by the government in both the Financial Memorandum and the Revised 2015 State Budget. However, the accepted budget deficit is still high compared to previous years.

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The government of Indonesia agreed with the House Budget Committee to adjust the economic growth target of Southeast Asia’s largest economy in 2015 to 5.8 percent, 0.2 percentage point up from the initial growth target proposed by the government in the Financial Memorandum as well as the 2015 State Budget Draft (APBN). Still, the 5.8 percent gross domestic product (GDP) growth target constitutes the lowest growth target set in Indonesia’s state budget (excluding revised state budgets) since the year 2010.

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Pemerintah mengakui sulit mengejar target pertumbuhan yang ditetapkan dalam APBN-P 2014 yakni sebesar 5.5 persen. Wakil Menteri Keuangan Bambang Brodjonegoro bahkan memperkirakan Indonesia harus bekerja keras mengejar pertumbuhan di level 5.3 persen. “Kita mencoba realistis. Mudah-mudahan di semester II bisa memperbaiki jadi sedikit bisa ke 5.3 persen. Outlook range kami di 5.2-5.3 persen,” tutur Bambang, pekan ini.

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Indonesia’s gross domestic product (GDP) growth in the first half of 2014 reached 5.17 percent (year-on-year), thus continuing the slowing growth trend that has been recorded by the country since 2011. Forecasts for GDP growth in the second half of 2014 indicate a slight improvement (to the range of 5.2 to 5.3 percent year-on-year) supported by strong household consumption, increased government spending and further growth of the trade and services sector. However, in recent quarters the official GDP figure has been lower than most forecasts.

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Statistics Indonesia (BPS) announced on Tuesday (05/08) that Indonesia’s economy grew 5.12 percent in the second quarter of 2014 from the same quarter last year. This means that gross domestic product (GDP) growth of Indonesia has continued the slowing trend it has been experiencing since 2011. The 5.12 percentage point GDP growth in Q2-2014 is the slowest growth pace that has been recorded by Southeast Asia’s largest economy since the fourth quarter of 2009. What explains this slowing economic growth of Indonesia?

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Senior economist at the Institute for Development of Economics and Finance (INDEF), Didier Damanhuri, believes that Indonesia’s two presidential candidates - Joko Widodo (popularly known as Jokowi) and Prabowo Subianto - are both similar in economic approach as both men are primarily focused on high gross domestic product (GDP) growth as the measurement for economic development, while, in fact, many countries that only focus on GDP growth show a high degree of economic inequality.

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The central bank of Indonesia (Bank Indonesia) expects Indonesia’s economy to grow by 5.3 percent in the second quarter of 2014. If realized, it means that gross domestic product (GDP) of Southeast Asia’s largest economy will accelerate from the disappointing GDP growth result recorded in the first quarter of 2014 (5.21 percent). Perry Warjiyo, Deputy Governor at Bank Indonesia, said that growth in Q2-2014 will be primarily supported by household consumption and investments which traditionally peak in the second quarter.

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The government of Indonesia will submit a new draft proposal for the 2014 Revised State Budget (APBN-P 2014) on 20 May 2014. Of the seven basic macroeconomic assumptions in the 2014 State Budget (APBN 2014), three assumptions are proposed to be revised. These involve general economic growth, the Indonesian rupiah exchange rate, and crude oil lifting. The government felt that the assumptions need a revision as results in the first quarter of 2014 have not been up to expectation.

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After Statistics Indonesia (BPS) had announced on Monday (05/05) that Indonesia's gross domestic product (GDP) grew by 5.21 percent year-on-year (yoy) in the first quarter of 2014 (considerably below analysts' projections of around 5.6 percent), concerns have risen about the country's economic expansion for the remainder of the year. The government of Indonesia targets a GDP growth rate of between 5.8 and 6.0 percent (yoy). However, several international institutions do not agree with this optimistic target.

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