Amid Improving Global Economy, Indonesia Optimistic about GDP Growth

Because of the still uncertain global context both the World Bank and International Monetary Fund (IMF) have downgraded their forecasts for Indonesia's GDP growth in 2014 to 5.4 percent and 5.5 percent respectively. However, not all analysts agreed with this downgrade (announced in November 2013) because at the same time both institutions upgraded forecasts for economic growth in 2014 in the world's two largest economies (USA and China). And an improving global economy, led by the USA and China, is more likely to translate into higher GDP growth in Indonesia as the country's exports will get a boost.

Since 2011, Indonesia had to cope with slowing economic growth. The most important factor that contributed to this falling growth rate was the global financial turmoil which led to a sharp reduction in the value of Indonesia's exports (particularly commodities). In 2013, however, the slowing pace of Indonesia's GDP growth accelerated due to the continuous depreciating rupiah exchange rate, high inflation, diminished foreign capital inflows (capital markets and foreign direct investments), higher interest rates and the lack of improvement in the global commodity prices.

Indonesia's Economic Growth 2009–2013 (annual percentage change):

Year	Quarter I	Quarter II	Quarter III	Quarter IV	Full Year
2013	6.05	5.83	5.62	-	5.7¹
2012	6.29	6.36	6.16	6.11	6.2
2011	6.45	6.52	6.49	6.50	6.5
2010	5.99	6.29	5.81	6.81	6.1
2009	4.60	4.37	4.31	4.58	4.6

^{¹ forecast
Source: Statistics Indonesia (BPS)}

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