Amid slowing economic growth, Indonesia’s unemployment rate increased slightly in August 2014. On Wednesday (05/11), Statistics Indonesia announced that 7.24 million Indonesians, or 5.94 percent of the country’s labour force, were without a job. In the previous unemployment report (covering conditions in the month February 2014), Indonesia’s unemployment rate stood at 5.70 percent of the country’s labour force (about 7.15 million Indonesians). The government agency releases Indonesia’s unemployment data twice per year.

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In its October East Asia Pacific Economic Update, the World Bank states that developing countries in the East Asia Pacific will experience slightly slower economic growth in 2014. However, the pace of growth in the region, excluding China, will improve next year, particularly due to a gradual recovery in high-income economies which then boosts demand for exports from the East Asia Pacific region. The report also claims that the developing East Asia Pacific region remains the fastest-growing region in the world.

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The World Bank released a news update which states that poverty reduction in Indonesia continues to slow down, with only a reduction of 0.7 percentage points over the last two years, or the smallest decline in the last decade. Meanwhile the institution says that inequality also increased in recent years, potentially disrupting social cohesion and hence jeopardizing the gains from solid economic growth, which has helped to reduce the poverty rate to 11.3 percent in 2014, compared to 24 percent in 1999.

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A recent World Bank report focuses on the impact of the Teacher Law and its reforms, on teacher knowledge, skills, and motivations in Indonesia. The report also looks at student learning outcomes. In 2005, the Indonesian government had passed the Teacher Law in an effort to improve education in Southeast Asia’s largest economy, specifically by raising the quality of Indonesian teachers. Under the new law, teachers must complete a four-year college degree to obtain certification, and continue to improve their skills.

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On 27 July 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve political and economic topics such as the presidential election result, foreign & domestic investment realization, poverty, corporate earnings reports, the latest World Bank report, and more.

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The World Bank said that the widening of income distribution inequality in Indonesia grew at the second fastest pace among Asian countries in the past two decades. Based on the World Bank’s Indonesia Economic Quarterly (IEQ) report, Indonesia recorded the second fastest Gini coefficient increase after China. In the period 1990-2011, the Gini coefficient of Indonesia rose by an average of 0.5 percentage point per year. This is a serious matter as social cohesion and economic growth can be jeopardized by increased inequality within Indonesian society.

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In response to the recent World Bank report that projects economic growth of Indonesia at 5.2 percent (year-on-year, yoy) in 2014, the Indonesian government is still optimistic that gross domestic product (GDP) growth of Southeast Asia’s largest economy can reach 5.5 percent this year. Indonesian Finance minister Chatib Basri said that household consumption, which traditionally accounts for about 55 percent of the country’s total economic growth, is expected to remain strong in 2014 and thus support GDP growth.

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The World Bank revised down its forecast for economic growth in Indonesia for the year 2014. In the July 2014 edition of the Indonesia Economic Quarterly, the institution projects economic growth in Southeast Asia’s largest economy at 5.2 percent, slightly down from its previous forecast of 5.3 percent. The downgrade is the result of a weaker outlook for commodity prices and tighter credit conditions. Moreover, the growing fiscal deficit contributes to the challenges that will be faced by the new government (which will be inaugurated in October 2014).

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The Governor of Indonesia’s central bank (Bank Indonesia), Agus Martowardojo, said that the Indonesian economy can grow more than six percent provided that several important structural reforms will be implemented in order to avoid the middle income trap. This trap occurs when rapidly growing economies stagnate at middle-income levels for many years, thereby failing to reach a high income level (as has been the case with Brazil, Mexico, South Africa and other middle income countries from the early 1980s to the mid-2000s).

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Doddy Riyadi, official at the Indonesian Economic Development Committee (KP3EI), said that logistics costs in Indonesia are expected to have fallen three to four percent by the year 2015. Currently, Indonesia is characterized by relatively high logistics costs, thereby reducing the competitiveness of Indonesian products on the international market (curbing exports) as well as, generally, causing a less attractive investment climate. The primary cause of high logistics costs is Indonesia’s lack of quality and quantity of infrastructure.

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The World Bank says income inequality in Indonesia is widening and as a consequence the fruits of Indonesia's economic growth over the past decade have only been enjoyed by the richest 20 percent of Indonesian society, leaving behind the remaining 80 percent of the population (or 200 million people). In its new report titled "Indonesia's Rising Divide" the World Bank states that rising inequality in society can jeopardize social cohesion, as well as political and economic stability over the long term. The report claims that inequality in Indonesia has reached a relatively high level and is climbing faster than in most of its regional peers.

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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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Sejak akhir 2011 Indonesia telah dibebani oleh defisit transaksi berjalan struktural yang menguatirkan baik para pembuat kebijakan maupun para investor (asing). Meskipun pihak berwenang di Indonesia telah mengimplementasikan reformasi kebijakan dan penyesuaian perekonomian di beberapa tahun terakhir, defisit transaksi berjalan Indonesia hanya sedikit berubah di 2015. Baik Bank Dunia maupun Bank Indonesia memprediksi bahwa defisit transaksi berjalan akan tetap berada sedikit di bawah 3% dari produk domestik bruto (PDB) di 2015, sangat dekat dengan batasan yang memisahkan defisit yang sustainable dan yang unsustainable.

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World Investment Report 2015 menyatakan bahwa masuknya investasi asing langsung (FDI) ke Indonesia bertumbuh 20% year-on-year (y/y) menjadi 23 miliar dollar Amerika Serikat (AS) pada tahun 2014. Maka pertumbuhan FDI di Indonesia melewati pertumbuhan FDI yang dicatat di Singapura (+4% y/y menjadi 68 miliar dollar AS) dan Vietnam (+3% menjadi 9,2 miliar dollar AS), menimbulkan optimisme bahwa Indonesia - negara dengan perekonomian terbesar di Asia Tenggara - akan terus menjadi tujuan investasi yang menguntungkan di Benua Asia untuk investor asing di tahun-tahun mendatang.

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Indonesia adalah pemegang saham terbesar ke-8 di Asian Infrastructure Investment Bank (AIIB) yang baru saja didirikan. Kementerian Keuangan Indonesia mengumumkan di awal minggu ini bahwa Indonesia akan menginvestasikan 672,1 juta dollar AS di AIIB selama lima tahun ke depan. AIIB adalah sebuah lembaga keuangan multilateral yang baru (dipelopori oleh Republik Rakyat Tiongkok) yang menyediakan dana untuk proyek pembangunan infrastruktur di wilayah Asia Pasifik.

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Hariyadi Sukamdani, Chairman of the Indonesian Employers Association (Apindo), expressed his concern about unemployment in Indonesia, particularly unemployment among the younger generation of Indonesians (aged between 15 and 29). Amid slowing economic growth over the past six years, various industries have been cutting employment. With roughly half of the total population below 30 years of age, Indonesia’s demographic bonus can turn into disaster if this potential workforce fails to obtain employment opportunities.

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Program Bantuan Operasional Sekolah (BOS) telah beroperasi selama satu dekade. Selama periode ini, program BOS terus menerus diperbaiki dan mengalirkan pendanaan yang besar untuk kira-kira 43 juta sekolah dasar dan sekolah menengah pertama di Indonesia. Program BOS yang berdana besar bertujuan untuk memastikan bahwa sekolah memiliki cukup dana untuk beroperasi, mengurangi biaya pendidikan yang dibayar rumah tangga dan memperbaiki manajemen berbasis sekolah.

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Although recently having slowed, Indonesia has experienced solid economic growth over the past ten years, with the country’s gross domestic product (GDP) almost doubling between 2001 and 2012. However, robust economic growth also resulted in significant environmental degradation and accelerated depletion of Indonesia’s natural resources. Sri Mulyani Indrawati, World Bank Group Managing Director (and former Indonesian Finance Minister), emphasized that Indonesia needs to shift from a ‘brown’ to a ‘green’ growth model.

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A new World Bank report, entitled “The Double Burden of Malnutrition in Indonesia”, says that 37.2 percent of Indonesian children under the age of five - or 8.4 million children - are stunted (meaning excessively small for their age) and suffer from chronic malnutrition. As such, Indonesia has the fifth-highest level of stunting in the world. The report also states that 19.6 percent of Indonesian children under five years old (approximately 4.4 million) are underweight as a result of malnutrition. Public awareness about this issue is low in Indonesia.

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The Asian Development Bank (ADB) released a report today (24/03) in which it discusses recent economic developments in Indonesia. According to the report, Indonesia’s economic growth is projected to accelerate over the two years ahead provided that the Indonesian government continues to implement structural policy reforms. Such reforms - which include the acceleration of infrastructure development, reduction of logistical costs, and enhancing budget implementation - should lead to an improvement of the investment climate.

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