Statistics Indonesia (BPS) announced this morning that Indonesia's official third quarter gross domestic product (GDP) growth was 4.73 percent (y/y), slightly below analysts' consensus at 4.80 percent (y/y). However, Indonesia's economic expansion improved from the six-year low of 4.67 percent (y/y) in the preceding quarter. Still, growth in Southeast Asia's largest economy remains sluggish amid low commodity prices, weak global demand, weaker household consumption, the high interest rate environment, and stagnating investment.

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Bank sentral Indonesia (Bank Indonesia) memprediksi akan terjadi penurunan inflasi yang besar dalam beberapa bulan terakhir di tahun 2015. Saat ini, laju inflasi tahunan mencapai 6,83% pada basis year-on-year (y/y). Kendati begitu, pada akhir tahun Bank Indonesia memperkirakan bahwa indeks harga konsumen akan menurun menjadi 3,6% (y/y), yang termasuk area bawah dari range target inflasi 2015 (3-5% y/y). Berita terbaru ini disampaikan oleh Gubernur Bank Indonesia Agus Martowardojo ketika bertemu dengan Forum Koordinasi Stabilitas Sistem Keuangan (FKSSK).

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Seperti yang telah diprediksi, bank sentral Indonesia (Bank Indonesia) mempertahankan suku bunga acuannya (BI rate) pada 7,50% dalam Pertemuan Dewan Gubernur Bulan Oktober yang dilaksanakan pada hari Kamis (15/10). Sementara itu, Bank Indonesia mempertahankan suku bunga Fasilitas Simpanan Bank Indonesia (Fasbi rate) dan suku bunga lending facility masing-masing pada 5,50% dan 8,00%. Suku bunga tidak diubah karena proyeksi perekonomian global masih sangat tidak jelas. Hal ini membahayakan stabilitas rupiah Indonesia.

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For the second time, the central bank of Indonesia (Bank Indonesia) cut its 2016 forecast for economic growth in Indonesia, Southeast Asia’s largest economy. Due to persistent low commodity prices and weak export figures, the central bank now estimates that Indonesia’s economy will grow in the range of 5.2 - 5.6 percent (y/y) next year, down from its earlier outlook of 5.3 - 5.7 percent and the initial outlook of 5.4 - 5.8 percent.

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Agus Martowardojo, Governor of Indonesia’s central bank (Bank Indonesia), said on Thursday (27/08) that the nation’s economic growth pace is expected to reach 4.89 percent (y/y) in full-year 2015, down from 5.0 percent (y/y) in the preceding year and it would mark the fifth straight year of economic slowing. Earlier this week, Bank Indonesia had already revised down its economic growth forecast to the range of 4.7 - 5.1 percent (y/y) in 2015 (from 5.0 - 5.4 percent previously).

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As Indonesia’s economic growth continued to slow in the second quarter of 2015, the Indonesian Employers Association (Apindo) warned of increasing unemployment in Southeast Asia’s largest economy. Each 1 percent gross domestic product (GDP) growth can generate between 200,000 and 300,000 new jobs in Indonesia. As such, when economic growth slows, society misses out on new jobs and with around two million Indonesians entering the labor force each year, job generation is an important task of the government.

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In response to the release of Indonesia’s official Q2-2015 GDP growth figure, which puts the country’s economic growth pace at 4.67 percent year-on-year (a six-year low), President Joko Widodo said the economy of Indonesia is bound to improve in the second quarter of the year, particularly from September onwards. Widodo said slowing economic growth was the result of troubled government budget absorption at both the central level and regional level. Moreover, the country has been plagued by external factors.

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Statistics Indonesia (BPS) announced today (05/08) that the Indonesian economy grew 4.67 percent (y/y) in the second quarter of 2015, the slowest pace since 2009. However, the result was in line with expectation. Most analysts assumed that economic growth would continue to slow as there has been no rebound in global commodity prices, interest rates remained high, people’s purchasing power weakened, government spending remained problematic, companies Q2-2015 earnings reports were not too good, and manufacturing contracted.

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The pace of economic growth of Indonesia is expected to remain below five percent year-on-year (y/y) in the second quarter of 2015 according to Reuters poll involving 22 analysts. In fact, the poll shows that further slowing economic growth is expected. In the first quarter of 2015, Indonesia’s economic growth came at 4.71 percent (y/y), the weakest growth pace in six years. According to the poll, analysts see a gross domestic product (GDP) growth rate of 4.61 percent (y/y) in the second quarter of 2015.

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Bank Pembangunan Asia (Asian Development Bank/ADB) mengumumkan telah mengurangi proyeksi pertumbuhan ekonomi 2015 dan 2016 baik untuk Republik Rakyat Tiongkok (RRT) maupun negara-negara berkembang Asia lainnya karena perlambatan perekonomian yang berkelanjutan di negara dengan ekonomi terbesar kedua di dunia ini. Ekspansi perekonomian RRT diproyeksikan untuk mencapai 7% pada basis year-on-year (y/y) di 2015 dan 6,8% (y/y) di 2016. Kedua proyeksi ini turun 0,2% poin dari proyeksi ADB sebelumnya.

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In a World Bank blog, World Bank economist Alex Sienaert posted an update on the economy of Indonesia. After Statistics Indonesia (BPS) released the country’s latest GDP growth figures in early February, two important revisions regarding Indonesia’s GDP statistics have been made: (1) BPS has shifted the basis of the computation from the year 2000 to 2010, and (2) it adopted a significantly updated methodology and presentation of the statistics (updating national accounts from the 1993 System of National Accounts [SNA] to SNA 2008).

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Walaupun pertumbuhan ekonomi Indonesia bergerak lebih lambat pada tahun 2014, terlihat optimisme bahwa pertumbuhan tersebut akan rebound pada tahun 2015 meskipun kondisi ekonomi global belum kondusif (dan membatasi kinerja ekspor Indonesia) serta lingkungan suku bunga Indonesia yang masih tinggi. Bank Indonesia menaikkan BI rate beberapa kali selama satu setengah tahun terakhir dalam upaya untuk mencegah inflasi tinggi (yang disebabkan oleh kenaikan harga BBM subsidi), menghambat aliran keluar modal menjelang pengetatan moneter AS, membatasi defisit transaksi berjalan dan mendukung nilai rupiah.

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A team of the International Monetary Fund (IMF), led by David Cowen (advisor at the IMF’s Asia and Pacific Department), visited several Indonesian cities in the first three weeks of December 2014 to conduct research on the economic fundamentals of Southeast Asia’s largest economy. This research included the study of recent macroeconomic developments as well as the formulation of prognosis scenarios for the short and middle term. The IMF team held discussions with the government, Bank Indonesia, private entrepreneurs and scholars.

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In order to avoid the middle-income trap and join the ranks of the high income countries by 2030 (reaching a per capita income level of at least USD $12,500), Indonesia needs to raise economic growth beyond the 7 percent year-on-year (y/y) level. If the current gross domestic product (GDP) growth rate is maintained (between 5 and 6 percent y/y) then it will take another decade to break from the middle income trap and become a high income country. However, GDP growth in 2014 is projected at a bleak 5.2 percent (y/y).

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Today (20/10), Central Jakarta seems to have changed into one big party as Joko Widodo was inaugurated as Indonesia’s seventh president earlier this morning. For the remainder of the day celebrations will be held at Monas (National Monument) and surrounding areas. However, it is of vital importance that Widodo (popularly known as Jokowi) will start to focus on this presidential duties tomorrow as the country is facing a number of economic challenges. What are these challenges?

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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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