This paper analyzes the economic condition of the second quarter of 2017 and provides the outlookfor 2017 and 2018. It covers the global dynamics and domestic in national level as well as spatial views inIndonesia. From external, global economic expansion continues, entailing a shift in the sources of growthwith China and Europe was expected to increase, while US economy grew slower than expected. At home,Indonesia’s economic growth was stable on the back of gain in investment particularly building investment.On the other hand, household consumption growth slowed, government consumption contracted afterspending was delayed, and exports posted slower growth. Spatially, the slowdown occurred in Java,Sulawesi and Kalimantan. CPI inflation was maintained within the target range despite increasing demandduring the lead up to national religious holidays. Balance of payments recorded a surplus while currentaccount deficit remains well maintained and financed by a large surplus in the capital and financial account..The rupiah rate moved steadily, with lower volatility relative to peer countries. The Banking industry waswell maintained and continued to strengthen financial system stability. The continued easing of monetarypolicy was responded by declining rates on deposits and loans. Moving forward, Bank Indonesia expectseconomic growth to accelerate in 2017, and grow higher in 2018 on the back of increased investmentand consumption in line with more expansive government spending along with space to ease monetarypolicy. On the other hand, inflationary pressures will be controlled in line with the lower inflation target.
The growth of Indonesian economy on Quarter II, 2016 increased with a well-maintained financial system and macroeconomic stability. Though the growth was not uniform across sectors, the aggregate growth has increased during this quarter, supported by domestic demand, fiscal stimulus, along with monetary policy ease. On the other hand, the macroeconomic stability was well preserved as reflected on inflation within the band target, a better current account deficit, and relatively stable Rupiah’s rate. This stable macroeconomic condition enabled the monetary authority to ease their policy. In the future, the policy coordination between the fiscal and the monetary authority is required, particularly on accelerating the implementation of structural reform, to support a sustainable economic growth.
This paper provides current analysis of the ongoing quarter, and brief outlook on the forthcoming quarter. We use a field survey along with estimation of macroeconomic models to provide the assessment and to make some projections on the monetary, the banking, and the payment system in Indonesia. This paper confirms the slowdown of the Indonesian economy during quarter two 2015 due to the slowing investment and the government expenditure, and the weak export performance. With the fiscal stimulus launched by the government, we expect to see an improvement in next two quarters. The lower current account deficit and manageable inflation will help to maintain the macroeconomic stability; however, the high global uncertainty will put depreciation pressure on Rupiah.
The growth of domestic economy in Indonesia is lower than forecasted in first quarter of 2016.However, the economy is expected to revive and will grow higher in the next quarter, with a well maintained financial system stability. The limited growth of government consumption as well as private investment are the main reason for the slower growth in this quarter, eventhough the government spending on capital goods accelerates. The growth of private consumption remains high with reasonable price movement. With the increase of several commodities’ export, the external performance of export in aggregate also increased. On the other hand, the financial system stability was stable due to viable banking system and better financial market performance. The stability of Rupiah was well maintained, supported by positive expectation on domestic economy and the lower risk of the global financial market.
The growth of Indonesian economy on Quarter III, 2016 recorded positive growth with a wellmaintained financial system and macroeconomic stability. The economy grew moderately supported by remaining strong domestic demand amidst the slow recovery of the global economy. The economic stability is also good reflected on the low inflation, decreasing current account deficit, and relatively stable exchange rate. An increase of domestic economy and lower global financial risk enable monetary ease on Quarter III, 2016. Furthermore, the reduction of interest rate policy is well transmitted and is expected to strengthen the growth momentum of the economy. Looking forward, Bank Indonesia will keep strengthening his policy mix and macroprudential, and his coordination with the government to ensure the inflation control, greater stimulus for growth, and the implementation of structural reform run on the right track, and hence preserve the sustainable economic development.
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