Indonesia's minister of Economy, Ir. M. Hatta Rajasa, stated that the government of Indonesia intends to realize economic growth of at least 6.2 percent in the second quarter of 2013 in order to remain on track for 6.3 percent growth for full year 2013. Although he reminded that it will take hard effort to realize this target, his message contained more optimism than Finance minister Chatib Basri's statement earlier this week who sees 6.0 percent of economic growth as the limit in Q2-2013.
Regarding the trade balance, Rajasa expects that a surplus will be hard to realize in Q2-2013 as Indonesia's exports (particularly commodities) are affected by weak global demand (resulting in lower global commodity prices). These international conditions will not show signs of improvement in the foreseeable future. Therefore, Rajasa foresees a major role for the government to spur economic growth by placing more emphasis on public investments and consumption.
Indonesia's GDP result of Q1-2013 was disappointing at 6.02 percent. The government has been facing monthly trade deficits (an unusual situation for the country), a weakening IDR rupiah, and pressures to raise the price of subsidized fuel (to relieve the budget balance). In early May 2013, Standard & Poor's downgraded the outlook of Indonesia's economy to BB+ with a stable outlook. Not long after, Moody's announced to take a similar step if the government does not slash fuel subsidies soon. The current long debates about a possible price hike this June only add to uncertainty, which translate into economic costs. The price hike is likely to trigger social unrest and significantly (yet temporary) higher inflation. President Susilo Bambang Yudhoyono said that the price will be increased in June if cash compensation programs for the poor are agreed upon by the House of Representatives (DPR).
Indonesia's GDP growth 2007-2013 (annual percentage points)
|Year|| Quarter I
||Quarter II||Quarter III||Quarter IV|
Source: Statistics Indonesia (BPS)