Indonesian Government's Macroeconomic Assumptions:

   State Budget
    Draft 2015
State Budget
      2014
 Revision State
   Budget 2014
 Realization
       2013
GDP Growth
annual percent change
      5.5 - 5.8          6.0            5.5         5.8
Inflation
annual percent change
        3 - 5          5.5            5.3         8.4
Exchange Rate
IDR/USD
 11,500-12,000      10,500         11,600      10,451
Treasury Bills Interest Rate
3-month, percent
      6.0 - 6.5          5.5            6.0         4.5
Crude Oil
USD $ per barrel
       95 - 110         105           105       105.7
Oil Lifting
thousand barrels per day
     900 - 950         870           818        825
Natural Gas Lifting
barrel of oil equivalent/day
  1,225 - 1,250       1,240         1,224       1,215

Source: Investor Daily


However, despite the improved outlook, risks remain due to the Federal Reserve’s tapering off policy (the bond- buying program/quantitative easing may end in the fall of 2014) as well as looming US interest rate hikes in 2015. This is expected to lead capital outflows from emerging markets, including Indonesia.

Other concerns for global economic expansion are sluggish growth in the Eurozone, higher sales tax in Japan (reducing Japanese consumers’ purchasing power), China’s slowing economy (resulting in the government’s focus on boosting domestic consumption), as well as India’s current account troubles.

To make accelerated economic growth possible, Indonesia’s next president (a race between Joko Widodo and Prabowo Subianto) should raise prices of subsidized fuels and attract a higher amount of foreign investment (although both candidates have uttered protectionist speech ahead of the election on 9 July 2014). Without these two matters, it will be difficult to obtain a healthy financial balance sheet (particularly structural current account troubles are a concern) or aim for +6 percentage point growth in the years ahead.

Since 2011, Indonesia’s economic growth has been slowing:


Indonesia's Quarterly GDP Growth 2009–2014 (annual % change):

 Year    Quarter I
   Quarter II    Quarter III    Quarter IV
 2014        5.21      
 2013        6.03        5.89         5.62         5.78
 2012        6.29        6.36         6.16         6.11
 2011        6.45        6.52         6.49         6.50
 2010        5.99        6.29         5.81         6.81
 2009        4.60         4.37         4.31         4.58

Source: Statistics Indonesia (BPS)


Gross Domestic Product of Indonesia 2006-2013:

    2006   2007   2008   2009   2010   2011   2012   2013
GDP
(in billion USD)
 285.9  364.6  432.1  510.2  539.4  706.6  846.8  878.0
GDP
(annual percent change)
   5.5    6.3    6.1    4.6    6.1    6.5    6.2    5.8
GDP per Capita
(in USD)
 1,643  1,923  2,244  2,345  3,010  3,540  3,592      -

Sources: World Bank, International Monetary Fund (IMF) and Statistics Indonesia (BPS)

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