The twenty-first APEC Economic Leaders Meeting, chaired by Indonesia's president Bambang Susilo Yudhoyono, has been concluded and in the words of the president the Summit "went on successfully and was indeed very productive." During the two-day Summit the central theme of APEC 2013: “Resilient Asia-Pacific, Engine of Global Growth” was discussed thoroughly and a number of strategic points were agreed upon. Seven of these points are highlighted in the APEC joint statement‏, delivered by Yudhoyono on Tuesday (08/10).

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The APEC Business Advisory Council (ABAC), a permanent high-level business advisory group that is created by the Asia Pacific Economic Cooperation (APEC), has given five recommendations to the 21 member countries of the APEC. These recommendations involve regional economic integration, sustainable development, entrepreneurship as well as small and medium enterprises (SMEs), an economic and banking forum, and lastly, a dialogue in the industry sector concerning scientific innovation.

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Indonesia’s economy continues to adjust, as weaker commodity prices, tighter international financing, and slowing domestic demand moderate the growth rate to 5.6 percent for 2013. This downward revision is discussed in the latest edition of the World Bank’s Indonesia Economic Quarterly (IEQ). Further moderation of growth (at 5.3 percent) may be expected in 2014, with growth in high income economies firming but international market conditions likely remaining volatile.

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Indonesia's trade deficit is expected to amount to USD $4 billion by the end of 2013, implying a moderation from the USD $5.54 billion deficit that emerged between January and August 2013. Indonesia's exports are forecast to decline by about 5 percent in the remainder of 2013 due to the weak global environment, particularly with the current ongoing political uncertainties in the USA. As such, in order to combat the deficit, the government intends to limit imports. Next year, Indonesia will most likely continue to post a trade deficit.

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Governor of Bank Indonesia, Agus Martowardojo and Governor of the People’s Bank of China, Zhou Xiaochuan, signed an extension to the Bilateral Currency Swap Arrangement (BCSA), representing a tangible manifestation of strong financial cooperation between both central banks in the areas of monetary policy and financial system stability. “The agreement reflects regional commitment in the face of global uncertainty and will contribute propitiously towards maintaining macroeconomic and domestic financial stability,” emphasized Martowardojo.

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The government of Indonesia is busy preparing an extra package of policy responses aimed at stabilizing Indonesia's financial markets. Previously, the government had released a sort of 'rescue package' in late August after the rupiah depreciated sharply and the country's stock indices plunged. Panic had emerged due to the looming end of the Federal Reserve's quantitative easing program. Coupled with internal issues, it resulted in robust capital outflows from Indonesia. The new package will be released in October.

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Finance Ministers of the Asia-Pacific Economic Cooperation (APEC) economies convened its 20th annual meeting in Nusa Dua, Bali, Indonesia, on 19 and 20 September 2013 under the Chairmanship of Dr. Muhamad Chatib Basri, Indonesia's Finance Minister. The meeting was attended by various delegates, including the President of the Asian Development Bank (ADB), the Managing Director of the World Bank Group, and the Deputy Managing Director of the International Monetary Fund (IMF).

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The outcome of Indonesia's 2014 budget deficit is expected to be higher than initially planned in the 2014 State Budget Draft (RAPBN 2014). In the 2014 draft, the deficit is proposed to amount to IDR 154.2 trillion (USD $13.6 billion), or 1.49 percent of Indonesia's gross domestic product (GDP). However, the government's latest estimate indicates a widening of the deficit to IDR 209.5 trillion (USD $18.5 billion), equivalent to 2.02 percent of GDP. The wider deficit is mainly caused by Indonesia's depreciating rupiah as well as the weak global economy.

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Singapore-based DBS Group, a leading financial services group in Asia, expects Indonesia's gross domestic product (GDP) growth to reach 5.8 percent in 2013, while it forecasts growth of 6.0 percent in 2014. This year, Indonesia has to cope with ups and downs due to several domestic and foreign factors. According to the institution, two issues stand out as being significantly influential this year. These are the government's decision to increase prices of subsidized fuels in late June and the country's sharply depreciating rupiah.

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Exports of China in August 2013 surpassed expectations and provides hope that the world's second largest economy is resuming its admirable growth. Overseas shipments were reported to have grown 7.2 percent year-on-year, while analysts expected a 5.5 percent growth rate. In July, China's exports had already recorded a 5.1 percent growth compared to the same month in 2012. On the other hand, imports in China grew slower than had been forecast at 7 percent (YoY). The country's trade surplus reached over USD $28 billion.

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Performa perekonomian Indonesia di kuartal 3 tahun 2015 agak mengecewakan pada 4,73% pada basis year-on-year (y/y) yang sedikit di bawah perkiraan pasar pada 4,8% (y/y). Kendati begitu, sebagai catatan positif, pertumbuhan produk domestik bruto (PDB) Indonesia berakselerasi dari level terendah selama 6 tahun terakhir pada 4,67% (y/y) di kuartal sebelumnya. Tabel di bawah menunjukkan bahwa pertumbuhan kuartal 3 PDB Indonesia jarang melebihi pertumbuhan kuartal 2. Ini jelas merupakan pertanda yang memberikan harapan.

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Today (22/10), the World Bank released the October 2015 edition of its flagship Indonesia Economic Quarterly, titled "In Times of Global Volatility". In the report the World Bank states that despite current ongoing global uncertainties (caused by looming monetary tightening in the USA and China's economic slowdown), which make macroeconomic management difficult in the year ahead, pro-active government action could offset the negative impact and may help to boost growth.

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For a good portion of this year, the stock market in Indonesia has been met with selling pressure. There is a reasonable basis for this, as we have seen some disappointments in corporate earnings that have led some of the biggest names in the country to trade lower. But there are external events at work, as well. And some of these factors might not be readily apparent to many regional investors. One of these is the sovereign debt situation in the Eurozone.

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In a surprise move, the central bank of Indonesia (Bank Indonesia) decided to lower its key interest rate (BI rate) by 25 basis points to 7.50 percent at the Board of Governor’s Meeting on Tuesday (17/02). The deposit facility rate (Fasbi) was also lowered by 25 basis points (to 5.50 percent), while the lending facility rate remained steady at 8.00 percent. In a press release the central bank stated that the current policy direction is estimated to moderate the country’s wide current account deficit further, while inflation remains under control.

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There was few good news from a global economic perspective as the International Monetary Fund (IMF) sharply cut its outlook for global economic growth in the next two years. According to the IMF, global economic growth will only reach 3.5 percent (y/y) in 2015 and 3.7 percent in 2016 due to poorer prospects in China, Russia, the Eurozone, and Japan. Economic growth of China (the world’s second-largest economy) fell to a 24-year low at 7.4 percent year-on-year (y/y) in 2014, below the government target of 7.5 percent (y/y).

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At the Indonesia Investment Summit 2015, organized in Jakarta on 15-16 January 2015, Bank Indonesia official Arief Mahmud presented several views of the central bank on the current Indonesian economy and the global and domestic challenges that it faces. As is widely known, Indonesia has been experiencing a process of slowing economic growth since 2011 due to sluggish global economic growth in combination with the rebalancing of the domestic economy. However, growth is expected to accelerate in 2015.

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As several Asian stock indices rebounded on Wednesday (07/01) Indonesia’s benchmark Jakarta Composite Index (IHSG) was able to rise as well. Investors purchased Indonesian blue chips which were considered relatively cheap after two days of decline. However, this may be speculative (short-term) buying as there are still no real domestic or foreign factors that can provide structural support. As such, there is a real possibility that Indonesia’s benchmark index will be back into red territory tomorrow.

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Indonesia’s inflation pace accelerated in December 2014, exceeding estimations of analysts and Indonesia’s central bank. December inflation, 2.46 percent (m/m) or 8.36 percent (y/y), accelerated due to the impact of higher subsidized fuel prices (introduced in November) and volatile food prices (fluctuating rice and chili prices at the year-end). Other factors that contributed to high inflation in 2014 were higher electricity tariffs for households and industries, the higher price of 12 kg LPG, and an airfare adjustment.

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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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