Bappenas More Optimistic about Indonesia's Economic Growth in 2014
Indonesia's Ministry of National Development Planning (Bappenas) is optimistic that economic expansion in Southeast Asia's largest economy will exceed the 6 percent mark in 2014, thus outpacing growth last year which reached 5.78 percent (yoy). According to Minister Armida S Alisjahbana, two factors will contribute positively to Indonesia's GDP growth in 2014. These are the legislative and presidential elections (scheduled for April and July 2014) as well as the improvement of Indonesia's trade balance.
Accelerating flows of funds and increased consumption in the context of the elections will provide a boost to the national economy. Armida S Alisjahbana, Minister of Indonesia's National Development Planning, expects that the elections will add 0.2 or 0.3 percentage points to GDP growth in 2014. She also hopes that the newly elected president and government will continue further fiscal reforms (for example regarding subsidies) and enhance the country's investment climate in order to continue the series of record breaking influxes of foreign direct investment (FDI) in recent years.
Alisjahbana further stated that Indonesia's December 2013 trade surplus of USD $1.52 billion was a sign of improved global demand and is most likely to continue into 2014. This will then also curtail the country's wide current account deficit which reached around 3.5 percent of GDP at the end of 2013 (thus having eased significantly from 4.4 percent of GDP in the second quarter of 2013 but is still not at a sustainable level). The wide current account deficit was one of the major problems of Indonesia's economy last year and led to large capital outflows.
In December 2013, the International Monetary Fund (IMF) projected Indonesia's GDP growth in 2014 in the range of 5.0 to 5.5 percent as it "detects a slowdown in GDP growth in major emerging market economies and decline in commodity prices, and more recently, a reversal in push factors tied to a prospective exit from extraordinarily easy global monetary conditions, has put pressure on Indonesia’s balance of payments and heightened its vulnerability to shocks. Domestic policy accommodation and rising energy subsidies have also given rise to increased external and fiscal imbalances."
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 | 5.72 | 5.8 |
| 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 |
Source: Statistics Indonesia (BPS)
Further Reading:
• Analysis of Indonesia's 5.78% Economic Expansion in 2013
• Analysis: What Caused Indonesia's Slowing Economic Growth in 2013
• Indonesia's Chamber of Commerce: Economic Growth Will Slow in 2014
• Chatib Basri Comments on Indonesia's Economic Performance in 2013
• Amid Improving Global Economy, Indonesia Optimistic about GDP Growth
• Overview and Analysis of Indonesia's Gross Domestic Product
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