ERM 2015 Session 1 Market and Economic Environment
Indonesian economic outlook in the
midst of global challenges
Muhammad Chatib Basri
Harvard Kennedy School
and
CReco Research
Short term problems:
macroeconomic stability
2
The macroeconomic impact of the global volatility
Risk of
capital
outflow
Improve trade
balance
or
Exchange rate
depreciation
Slow
down of
China
Deteriorate trade
balance
Imported
inflation
The Fed
interest
rate hike
Problem in
Euro and
China
(financial)
Risk of assets
re pricing
Bank Indonesia: interest rate ↑
Govt tighten fiscal
Bank Indonesia: lower interest
rate
Govt: Expand fiscal
Wealth effect
Slow down
growth
Declining
commodity
price
Declining
oil price
Government
Revenue
Solution:
FDI export oriented ↑ → BoP +
3
4
GDP Growth
(Countries, annual, 2015 data is q1 data, percent, last data in the bracket)
15
China (7.0)
India (7.51)
10
5
Indonesia (4.71)
Brazil (-1.56)
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
South Africa (1.3)
-5
Rusia (-2.2)
-10
Source: CEIC, World Bank
Greece (0.35)
2015
GDP Growth
(ASEAN countries, annual, 2015 data is q1 data, percent, last data in the bracket)
9
Vietnam (6.13)
Philippines (5.16)
7
Indonesia (4.71)
5
Malaysia (5.65)
3
Thailand (3.04)
1
2005
2006
-1
-3
Source: CEIC, World Bank
2007
2008
2009
2010
2011
2012
2013
2014
2015
GDP Growth
GDP Growth
5,2
6
5,1
7
8
5
4
4,9
2
4,8
0
Mar, 2014 Apr, 2014 Mei, 2014 Jun, 2014 Jul, 2014 Agu, 2014 Sep, 2014 Okt, 2014 Nov, 2014 Des, 2014 Jan, 2015 Feb, 2015 Mar, 2015
4,7
-2
4,6
-4
4,5
4,4
-6
Private Cons
Govt Exp
Inv
Export
Import
GDP
GDP Growth
Table 5
Growth Rate of GDP By Expenditure Base Year 2010
(percent)
Source of Growth
Pertumbuhan
Qtr. II-2015
(y-on-y)
Component
Qtr. I-2015
Over
Qtr. IV-2014
(1)
(2)
(3)
(4)
(5)
(6)
(7)
1. Pengeluaran Konsumsi Rumah Tangga
0.11
1.11
5.01
4.97
4.99
2.66
2. Pengeluaran Konsumsi LNPRT
-1.19
2.39
-8.25
-7.91
-8.08
-0.10
-48.43
32.17
2.71
2.28
2.47
0.18
-4.77
3.04
4.29
3.55
3.92
1.14
-
-
-
-
-
-
-6.28
1.56
-0.85
-0.13
-0.49
-0.03
-10.04
1.06
-2.27
-6.85
-4.62
-1.63
-0.17
3.78
4.72
4.67
4.70
4.67
3. Pengeluaran Konsumsi Pemerintah
4. Pembentukan Modal Tetap Domestik Bruto
5. Perubahan Inventori
6. Ekspor Barang dan Jasa
7. Dikurangi Impor Barang dan Jasa
Gross Domestic Bruto (GDP)
Qtr. II-2015
Over
Qtr. I-2015
Qtr. I-2015
Over
Qtr. I-2014
Qtr. II-2015
Over
Qtr. II-2014
Semester I-2015
Over
Semester I-2014
8
Table 2
Growth Rate of GDP By Industrial Origin Base Year 2010
(percent)
Qtr. II-2015
Over
Qtr. I-2015
Qtr. I-2015
Over
Qtr. I-2014
Qtr. II-2015
Over
Qtr. II-2014
Semester I-2015
Over
Semester I-2014
Source of Growth
Pertumbuhan
Qtr. II-2015
(y-on-y)
Industrial Origin
Qtr. I-2015
Over
Qtr. IV-2014
(1)
(2)
(3)
(4)
(5)
(6)
(7)
A.
Pertanian, Kehutanan, dan Perikanan
14.85
10.09
4.00
6.64
5.37
0.91
B.
Pertambangan dan Penggalian
-8.18
-2.57
-1.23
-5.87
-3.58
-0.54
C.
Industri Pengolahan
-0.53
3.86
3.97
4.42
4.20
0.96
D.
Pengadaan Listrik dan Gas
-7.17
4.43
1.73
0.76
1.23
0.01
E.
Pengadaan Air, Pengelolaan Sampah, Limbah dan
Daur Ulang
0.27
0.19
2.27
2.15
2.21
0.00
F.
Konstruksi
-5.95
3.14
6.03
5.35
5.68
0.51
G.
Perdagangan Besar dan Eceran; Reparasi Mobil
dan Sepeda Motor
-0.41
3.94
3.96
1.69
2.79
0.24
H.
Transportasi dan Pergudangan
-1.25
3.62
6.26
6.59
6.43
0.25
I.
Penyediaan Akomodasi dan Makan Minum
0.20
1.74
3.56
3.87
3.72
0.12
J.
Informasi dan Komunikasi
2.61
2.08
10.06
9.56
9.81
0.43
K.
Jasa Keuangan dan Asuransi
0.71
-1.21
7.57
2.46
4.97
0.09
L.
Real Estat
1.17
1.08
5.26
5.03
5.14
0.15
M,N.
Jasa Perusahaan
2.24
1.78
7.36
7.64
7.50
0.12
O.
Administrasi Pemerintahan, Pertahanan dan
-6.43
0.48
4.71
6.46
5.58
0.21
-10.89
6.31
5.92
12.16
9.05
0.36
-6.39
3.30
7.34
8.16
7.76
0.08
R,S,T,U. Jasa Lainnya
1.84
1.99
8.00
8.07
8.04
0.13
Nilai Tambah Bruto Atas Harga Dasar
-0.43
3.50
4.44
4.13
4.28
4.03
Pajak Dikurang Subsidi Atas Produk
10.31
13.96
16.25
26.70
21.59
0.64
Gross Domestic Bruto (GDP)
-0.17
3.78
4.72
4.67
4.70
4.67
Jaminan Sosial Wajib
P.
Jasa Pendidikan
Q.
Jasa Kesehatan dan Kegiatan Sosial
9
10
11
Inflation
Headline
Core
Administered
Volatile
(yoy growth, percent)
20
18
16
14
12
10
8
6
4
2
0
6
8
10 12
2010
Source:
CEIC
2
4
6
2011
8
10 12
2
4
6
2012
8
10 12
2
4
6
2013
8
10 12
2
4
6
2014
8
10 12
2
4
2015
6
8
CPI by Expenditure
(percent)
Group Spending
Headline
CPI
CPI
MOM
MOM
YOY
YOY
YOY
Jul 2015 Aug 2015 Jul 2015 Aug 2015 Aug 2014 Jul 2015 Aug 2015
Contr
121.26
121.73
0.93
0.39
3.84
7.26
7.18
7.18
130.57
131.38
1.95
0.62
1.07
8.25
8.60
1.45
Food, beverages, cigarettes and
tobacco
122.59
123.27
0.51
0.55
6.30
7.83
7.91
1.27
3 Housing, water, electricity, and fuel
119.38
119.65
0.18
0.23
5.97
7.94
7.30
1.19
4 Clothing
109.16
109.20
0.41
0.03
4.40
3.34
3.12
0.50
5 Health
115.71
116.49
0.53
0.67
4.96
6.25
6.58
0.97
6 Education, recreation and sport
110.27
111.63
0.30
1.23
3.80
3.82
4.24
0.48
116.87
116.78
0.73
-0.07
1.66
7.99
7.92
1.31
1 Foodstuff
2
7
Transportation, communication and
finance
Okt-09
Jan-10
Apr-10
Working Capital
Jul-10
Okt-10
Jan-11
Apr-11
Jul-11
Okt-11
Investment
Jan-12
Apr-12
Jul-12
Okt-12
Jan-13
Consumption
Apr-13
Jul-13
Okt-13
Jan-14
Apr-14
Jul-14
Okt-14
Jan-15
Apr-15
Credit Growth
Jul-09
(yoy growth, percent)
Total Credit
Apr-09
50
Jan-09
40
Okt-08
30
Jul-08
20
Apr-08
10
0
-10
Source: CEIC
Jan-08
Tax Revenue realization as of July 31st,
2015
No
Type of Tax
Non Oil and Gas Income Tax
A (PPh)
B VAT and Luxuries
. taxes
2014
Realization
458,692.28
Revised 2105
State Budget
629,835.35
Target Δ%
(20142015) 2014 as of July 2015 as of
31
July 31
37.31 258.486,23 293.521,34
Δ%
(20142015)
13.55
408.995,74
576.469,17
40,95
216,137.27 202.701,81 (6,22)
C Land taxes
23.475,71
26.689,88
13,69
1,049.73
D Oil and gas taxes
87.446,35
49.534,79
(43,35) 51,876.00
E Total A+B+C+D
897.456,86
1.244.723,88 38,69
479,001.27 499.738,89 4,33
F
984.903,21
1.294.258,67 31,41
530,877.27 531.114,43 0,04
Total A+B+C+D+E
558,07
(46,84)
31.375,54
(39,52)
Des-05
Nov-06
Jun-00
Mei-01
Apr-02
Mar-03
Feb-04
Jan-05
Des-05
Nov-06
Okt-07
Okt-07
Sep-08
Sep-08
Agu-09
Agu-09
Jul-10
Jul-10
Jun-11
Jun-11
Mei-12
Mei-12
Apr-13
Apr-13
Mar-14
Mar-14
Feb-15
Feb-15
Nickle
(US Dollars per Metric Ton)
Jun-06
60.000
Jun-05
50.000
Jun-04
40.000
Jun-03
30.000
Jun-02
20.000
Jun-01
10.000
0
Jun-00
Jun-00
Mei-01
Apr-02
Mar-03
Feb-04
Jan-05
Des-05
Nov-06
Jun-07
Okt-07
Jun-08
Sep-08
Jun-09
Agu-09
Jun-10
Jul-10
Jun-11
Jun-11
Jun-12
Mei-12
Jun-13
Apr-13
Jun-14
Jun-15
Mar-14
Feb-15
Commodity Price
Jan-05
Crude Oil
(US Dollars per Barrel)
Feb-04
Palm Oil
(US Dollars per Metric Ton)
Mar-03
160
140
120
100
80
60
40
20
0
Apr-02
1400
1200
1000
800
600
400
200
0
Mei-01
Coal
(US Dollars per Metric Ton)
250
200
150
100
50
0
Source: Index Mundi
Jun-00
Mei-12
Jul-12
China (LHS)
Sep-12
Nov-12
Jan-13
Mar-13
Germany (RHS)
Mei-13
Jul-13
Nov-13
US (RHS)
Sep-13
Indonesia (LHS)
Mar-14
Mei-14
Jul-14
India (LHS)
Jan-14
Sep-14
Japan (RHS)
Nov-14
Jan-15
Mar-15
Mei-15
Policy Rates
Mar-12
(Percent)
9
8
7
6
5
4
3
2
1
0
Jan-12
1,2
1,0
0,8
0,6
0,4
0,2
0,0
Real Interest Rate
(Monthly, Gov.Bond 10y, %)
5
4
3
Indonesia
China
2
1
US
Germany
0
-1
-2
-3
India
Japan
-4
-5
Source: CEIC
Source: CEIC
Data as of Aug 28,
2015
Exchange Rates
(Commodity countries, Des 2013=100)
220
200
180
Russia
160
140
Brazil
120
Australia
South Africa
100
Indonesia
80
Source: CEIC
Short and long term challenges
Short term:
Potential growth is limited
--> stabilization over
growth
Mediumlong term:
focus on supply constraint
22
Medium term and long-term
issues: how to improve
productivity
23
In technology: no self discovery
Source: Authors’ calculation using UN-Comtrade data
based on SITC classification
Source: Basri and Rahardja ( 2011)
24
Capability to undertake complex task is
still behind other middle income
countries
If products could not be
made in Indonesia, where
else can they be made?
From observed trade data,
Indonesia made progress in
improving capability to
export products requiring
more complex task (but so
does Vietnam)
Why matters? It reflects
institutional capacity and
ability to accumulate and
channel knowledge into
productive activities
Not yet able to manage complex tasks?
Economic Complexity Index
25
Source: Atlas of Economic Complexity (Hausmann and Hidalgo et.al)
Development challenges are beyond
macro-stability
Brazil
China
India
Indonesia
Malaysia
Philippines
Thailand
Vietnam
Characteristics (2013)
Population (person mn)
200.4
1,357.4
1,252.1
249.9
29.7
98.4
67.0
89.7
GDP Per Capita (in PPP, USD)
5,823
3,583
1,165
1,810
6,998
1,581
3,438
1,029
24.0
144.6
421.1
137.9
90.4
330.0
131.2
289.3
68.3
31.4
-0.3
6.4
2.5
39.2
25.0
50.9
Math
391
613
351*
375
421
427
511
Science
406
580
348*
382
420
438
528
10.08
13.36
1.16
1.3
8.22
9.12
7.36
5.62
2.94
3.53
3.08
3.08
3.59
3.00
3.43
3.15
82
76
67
70
97
71
83
76
-0.08
-0.03
-0.19
-0.24
1.10
0.06
0.21
-0.30
Density (person/sq km)
Real Exchange Rate Movement (%)
2003-2013 (average
PISA Test Score (2012)
Broadband Penetration
Fixed (wired)-broadband subscriptions per
100 inhabitants (2013)
Logistics Performance Index (2014)
Percentage of shipment met quality
Government
score Pradesh
* Tamileffectiveness
Nadu dan Himachal
Sources: World Bank, ITU, BIIS and others
26
Policy anticipation
Short term
Medium term
• Increase aggregate
demand:
• cash transfer,
• cash for work,
• tax incentive for
companies to keep their
workers
• Infrastructure
• Human capital: Attract
FDI for technology spill
over
• Tax incentive for R&D,
training, export oriented
sector
27
midst of global challenges
Muhammad Chatib Basri
Harvard Kennedy School
and
CReco Research
Short term problems:
macroeconomic stability
2
The macroeconomic impact of the global volatility
Risk of
capital
outflow
Improve trade
balance
or
Exchange rate
depreciation
Slow
down of
China
Deteriorate trade
balance
Imported
inflation
The Fed
interest
rate hike
Problem in
Euro and
China
(financial)
Risk of assets
re pricing
Bank Indonesia: interest rate ↑
Govt tighten fiscal
Bank Indonesia: lower interest
rate
Govt: Expand fiscal
Wealth effect
Slow down
growth
Declining
commodity
price
Declining
oil price
Government
Revenue
Solution:
FDI export oriented ↑ → BoP +
3
4
GDP Growth
(Countries, annual, 2015 data is q1 data, percent, last data in the bracket)
15
China (7.0)
India (7.51)
10
5
Indonesia (4.71)
Brazil (-1.56)
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
South Africa (1.3)
-5
Rusia (-2.2)
-10
Source: CEIC, World Bank
Greece (0.35)
2015
GDP Growth
(ASEAN countries, annual, 2015 data is q1 data, percent, last data in the bracket)
9
Vietnam (6.13)
Philippines (5.16)
7
Indonesia (4.71)
5
Malaysia (5.65)
3
Thailand (3.04)
1
2005
2006
-1
-3
Source: CEIC, World Bank
2007
2008
2009
2010
2011
2012
2013
2014
2015
GDP Growth
GDP Growth
5,2
6
5,1
7
8
5
4
4,9
2
4,8
0
Mar, 2014 Apr, 2014 Mei, 2014 Jun, 2014 Jul, 2014 Agu, 2014 Sep, 2014 Okt, 2014 Nov, 2014 Des, 2014 Jan, 2015 Feb, 2015 Mar, 2015
4,7
-2
4,6
-4
4,5
4,4
-6
Private Cons
Govt Exp
Inv
Export
Import
GDP
GDP Growth
Table 5
Growth Rate of GDP By Expenditure Base Year 2010
(percent)
Source of Growth
Pertumbuhan
Qtr. II-2015
(y-on-y)
Component
Qtr. I-2015
Over
Qtr. IV-2014
(1)
(2)
(3)
(4)
(5)
(6)
(7)
1. Pengeluaran Konsumsi Rumah Tangga
0.11
1.11
5.01
4.97
4.99
2.66
2. Pengeluaran Konsumsi LNPRT
-1.19
2.39
-8.25
-7.91
-8.08
-0.10
-48.43
32.17
2.71
2.28
2.47
0.18
-4.77
3.04
4.29
3.55
3.92
1.14
-
-
-
-
-
-
-6.28
1.56
-0.85
-0.13
-0.49
-0.03
-10.04
1.06
-2.27
-6.85
-4.62
-1.63
-0.17
3.78
4.72
4.67
4.70
4.67
3. Pengeluaran Konsumsi Pemerintah
4. Pembentukan Modal Tetap Domestik Bruto
5. Perubahan Inventori
6. Ekspor Barang dan Jasa
7. Dikurangi Impor Barang dan Jasa
Gross Domestic Bruto (GDP)
Qtr. II-2015
Over
Qtr. I-2015
Qtr. I-2015
Over
Qtr. I-2014
Qtr. II-2015
Over
Qtr. II-2014
Semester I-2015
Over
Semester I-2014
8
Table 2
Growth Rate of GDP By Industrial Origin Base Year 2010
(percent)
Qtr. II-2015
Over
Qtr. I-2015
Qtr. I-2015
Over
Qtr. I-2014
Qtr. II-2015
Over
Qtr. II-2014
Semester I-2015
Over
Semester I-2014
Source of Growth
Pertumbuhan
Qtr. II-2015
(y-on-y)
Industrial Origin
Qtr. I-2015
Over
Qtr. IV-2014
(1)
(2)
(3)
(4)
(5)
(6)
(7)
A.
Pertanian, Kehutanan, dan Perikanan
14.85
10.09
4.00
6.64
5.37
0.91
B.
Pertambangan dan Penggalian
-8.18
-2.57
-1.23
-5.87
-3.58
-0.54
C.
Industri Pengolahan
-0.53
3.86
3.97
4.42
4.20
0.96
D.
Pengadaan Listrik dan Gas
-7.17
4.43
1.73
0.76
1.23
0.01
E.
Pengadaan Air, Pengelolaan Sampah, Limbah dan
Daur Ulang
0.27
0.19
2.27
2.15
2.21
0.00
F.
Konstruksi
-5.95
3.14
6.03
5.35
5.68
0.51
G.
Perdagangan Besar dan Eceran; Reparasi Mobil
dan Sepeda Motor
-0.41
3.94
3.96
1.69
2.79
0.24
H.
Transportasi dan Pergudangan
-1.25
3.62
6.26
6.59
6.43
0.25
I.
Penyediaan Akomodasi dan Makan Minum
0.20
1.74
3.56
3.87
3.72
0.12
J.
Informasi dan Komunikasi
2.61
2.08
10.06
9.56
9.81
0.43
K.
Jasa Keuangan dan Asuransi
0.71
-1.21
7.57
2.46
4.97
0.09
L.
Real Estat
1.17
1.08
5.26
5.03
5.14
0.15
M,N.
Jasa Perusahaan
2.24
1.78
7.36
7.64
7.50
0.12
O.
Administrasi Pemerintahan, Pertahanan dan
-6.43
0.48
4.71
6.46
5.58
0.21
-10.89
6.31
5.92
12.16
9.05
0.36
-6.39
3.30
7.34
8.16
7.76
0.08
R,S,T,U. Jasa Lainnya
1.84
1.99
8.00
8.07
8.04
0.13
Nilai Tambah Bruto Atas Harga Dasar
-0.43
3.50
4.44
4.13
4.28
4.03
Pajak Dikurang Subsidi Atas Produk
10.31
13.96
16.25
26.70
21.59
0.64
Gross Domestic Bruto (GDP)
-0.17
3.78
4.72
4.67
4.70
4.67
Jaminan Sosial Wajib
P.
Jasa Pendidikan
Q.
Jasa Kesehatan dan Kegiatan Sosial
9
10
11
Inflation
Headline
Core
Administered
Volatile
(yoy growth, percent)
20
18
16
14
12
10
8
6
4
2
0
6
8
10 12
2010
Source:
CEIC
2
4
6
2011
8
10 12
2
4
6
2012
8
10 12
2
4
6
2013
8
10 12
2
4
6
2014
8
10 12
2
4
2015
6
8
CPI by Expenditure
(percent)
Group Spending
Headline
CPI
CPI
MOM
MOM
YOY
YOY
YOY
Jul 2015 Aug 2015 Jul 2015 Aug 2015 Aug 2014 Jul 2015 Aug 2015
Contr
121.26
121.73
0.93
0.39
3.84
7.26
7.18
7.18
130.57
131.38
1.95
0.62
1.07
8.25
8.60
1.45
Food, beverages, cigarettes and
tobacco
122.59
123.27
0.51
0.55
6.30
7.83
7.91
1.27
3 Housing, water, electricity, and fuel
119.38
119.65
0.18
0.23
5.97
7.94
7.30
1.19
4 Clothing
109.16
109.20
0.41
0.03
4.40
3.34
3.12
0.50
5 Health
115.71
116.49
0.53
0.67
4.96
6.25
6.58
0.97
6 Education, recreation and sport
110.27
111.63
0.30
1.23
3.80
3.82
4.24
0.48
116.87
116.78
0.73
-0.07
1.66
7.99
7.92
1.31
1 Foodstuff
2
7
Transportation, communication and
finance
Okt-09
Jan-10
Apr-10
Working Capital
Jul-10
Okt-10
Jan-11
Apr-11
Jul-11
Okt-11
Investment
Jan-12
Apr-12
Jul-12
Okt-12
Jan-13
Consumption
Apr-13
Jul-13
Okt-13
Jan-14
Apr-14
Jul-14
Okt-14
Jan-15
Apr-15
Credit Growth
Jul-09
(yoy growth, percent)
Total Credit
Apr-09
50
Jan-09
40
Okt-08
30
Jul-08
20
Apr-08
10
0
-10
Source: CEIC
Jan-08
Tax Revenue realization as of July 31st,
2015
No
Type of Tax
Non Oil and Gas Income Tax
A (PPh)
B VAT and Luxuries
. taxes
2014
Realization
458,692.28
Revised 2105
State Budget
629,835.35
Target Δ%
(20142015) 2014 as of July 2015 as of
31
July 31
37.31 258.486,23 293.521,34
Δ%
(20142015)
13.55
408.995,74
576.469,17
40,95
216,137.27 202.701,81 (6,22)
C Land taxes
23.475,71
26.689,88
13,69
1,049.73
D Oil and gas taxes
87.446,35
49.534,79
(43,35) 51,876.00
E Total A+B+C+D
897.456,86
1.244.723,88 38,69
479,001.27 499.738,89 4,33
F
984.903,21
1.294.258,67 31,41
530,877.27 531.114,43 0,04
Total A+B+C+D+E
558,07
(46,84)
31.375,54
(39,52)
Des-05
Nov-06
Jun-00
Mei-01
Apr-02
Mar-03
Feb-04
Jan-05
Des-05
Nov-06
Okt-07
Okt-07
Sep-08
Sep-08
Agu-09
Agu-09
Jul-10
Jul-10
Jun-11
Jun-11
Mei-12
Mei-12
Apr-13
Apr-13
Mar-14
Mar-14
Feb-15
Feb-15
Nickle
(US Dollars per Metric Ton)
Jun-06
60.000
Jun-05
50.000
Jun-04
40.000
Jun-03
30.000
Jun-02
20.000
Jun-01
10.000
0
Jun-00
Jun-00
Mei-01
Apr-02
Mar-03
Feb-04
Jan-05
Des-05
Nov-06
Jun-07
Okt-07
Jun-08
Sep-08
Jun-09
Agu-09
Jun-10
Jul-10
Jun-11
Jun-11
Jun-12
Mei-12
Jun-13
Apr-13
Jun-14
Jun-15
Mar-14
Feb-15
Commodity Price
Jan-05
Crude Oil
(US Dollars per Barrel)
Feb-04
Palm Oil
(US Dollars per Metric Ton)
Mar-03
160
140
120
100
80
60
40
20
0
Apr-02
1400
1200
1000
800
600
400
200
0
Mei-01
Coal
(US Dollars per Metric Ton)
250
200
150
100
50
0
Source: Index Mundi
Jun-00
Mei-12
Jul-12
China (LHS)
Sep-12
Nov-12
Jan-13
Mar-13
Germany (RHS)
Mei-13
Jul-13
Nov-13
US (RHS)
Sep-13
Indonesia (LHS)
Mar-14
Mei-14
Jul-14
India (LHS)
Jan-14
Sep-14
Japan (RHS)
Nov-14
Jan-15
Mar-15
Mei-15
Policy Rates
Mar-12
(Percent)
9
8
7
6
5
4
3
2
1
0
Jan-12
1,2
1,0
0,8
0,6
0,4
0,2
0,0
Real Interest Rate
(Monthly, Gov.Bond 10y, %)
5
4
3
Indonesia
China
2
1
US
Germany
0
-1
-2
-3
India
Japan
-4
-5
Source: CEIC
Source: CEIC
Data as of Aug 28,
2015
Exchange Rates
(Commodity countries, Des 2013=100)
220
200
180
Russia
160
140
Brazil
120
Australia
South Africa
100
Indonesia
80
Source: CEIC
Short and long term challenges
Short term:
Potential growth is limited
--> stabilization over
growth
Mediumlong term:
focus on supply constraint
22
Medium term and long-term
issues: how to improve
productivity
23
In technology: no self discovery
Source: Authors’ calculation using UN-Comtrade data
based on SITC classification
Source: Basri and Rahardja ( 2011)
24
Capability to undertake complex task is
still behind other middle income
countries
If products could not be
made in Indonesia, where
else can they be made?
From observed trade data,
Indonesia made progress in
improving capability to
export products requiring
more complex task (but so
does Vietnam)
Why matters? It reflects
institutional capacity and
ability to accumulate and
channel knowledge into
productive activities
Not yet able to manage complex tasks?
Economic Complexity Index
25
Source: Atlas of Economic Complexity (Hausmann and Hidalgo et.al)
Development challenges are beyond
macro-stability
Brazil
China
India
Indonesia
Malaysia
Philippines
Thailand
Vietnam
Characteristics (2013)
Population (person mn)
200.4
1,357.4
1,252.1
249.9
29.7
98.4
67.0
89.7
GDP Per Capita (in PPP, USD)
5,823
3,583
1,165
1,810
6,998
1,581
3,438
1,029
24.0
144.6
421.1
137.9
90.4
330.0
131.2
289.3
68.3
31.4
-0.3
6.4
2.5
39.2
25.0
50.9
Math
391
613
351*
375
421
427
511
Science
406
580
348*
382
420
438
528
10.08
13.36
1.16
1.3
8.22
9.12
7.36
5.62
2.94
3.53
3.08
3.08
3.59
3.00
3.43
3.15
82
76
67
70
97
71
83
76
-0.08
-0.03
-0.19
-0.24
1.10
0.06
0.21
-0.30
Density (person/sq km)
Real Exchange Rate Movement (%)
2003-2013 (average
PISA Test Score (2012)
Broadband Penetration
Fixed (wired)-broadband subscriptions per
100 inhabitants (2013)
Logistics Performance Index (2014)
Percentage of shipment met quality
Government
score Pradesh
* Tamileffectiveness
Nadu dan Himachal
Sources: World Bank, ITU, BIIS and others
26
Policy anticipation
Short term
Medium term
• Increase aggregate
demand:
• cash transfer,
• cash for work,
• tax incentive for
companies to keep their
workers
• Infrastructure
• Human capital: Attract
FDI for technology spill
over
• Tax incentive for R&D,
training, export oriented
sector
27