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Indonesia economic quarterly : adjusting to pressures (English)

The second quarter of 2013 was an eventful one as Indonesia's economy, policy settings and financial markets adjusted to pressures which have been mounting over recent quarters and to shifts in the global environment. Following slightly weaker-than-expected growth in the first quarter, there are signs that domestic demand, particularly investment, has continued to moderate. On the fiscal front, the combination of lower revenues and higher subsidy spending continued to pressure public finances. A revised Budget, incorporating a long a waited increase in subsidized fuel prices, along with a comprehensive compensation package to reduce the impact of higher fuel prices on the poor, was approved on June 17. Meanwhile, international financial markets have reacted strongly to the prospect of quantitative easing in the US winding down in coming quarters, triggering a major sell-off in emerging market assets, including Indonesia, prompting Bank Indonesia (BI) to adjust interest rates higher.

Details

  • Document Date

    2013/07/01

  • Document Type

    Working Paper

  • Report Number

    79280

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Indonesia,

    World,

  • Region

    The World Region,

  • Disclosure Date

    2013/07/04

  • Disclosure Status

    Disclosed

  • Doc Name

    Indonesia economic quarterly : adjusting to pressures

  • Keywords

    Fuel Subsidies;fuel price;commodity price;emerging market asset;higher fuel price;conditional cash transfer program;efficient use of fuel;negative impact on growth;public sector wage bill;fiscal saving;balance of payment;current account deficit;international financial market;government bond yield;Exchange Rates;net foreign purchases;high income economy;global economic growth;social assistance measures;crude oil price;social security system;motor vehicle sale;variable rate debt;south african rand;portfolio capital inflow;social protection system;financial market development;Foreign Exchange Reserve;private external debt;total debt stock;implementation of policies;health coverage program;financial market participant;high inflation rate;real exchange rate;emerging market equity;tight monetary policy;domestic financial market;pace of expansion;stable exchange rate;retail fuel prices;value added tax;barrels per day;maternal and child;corporate income tax;income tax revenue;machinery and equipment;domestic bond market;commercial bank lending;social security coverage;domestic government bond;regional equity index;emerging market currency;demand for import;financial market volatility;foreign currency earnings;domestic oil production;drag on growth;consumer price index;budget execution;fiscal deficit;trading partner;domestic demand;vulnerable household;banking sector;baseline scenario;compensation measures;nutrition problem;asset market;dollar bond;percent change;reform package;market price;base case;external demand;foreign investor;import growth;treasury yield;bond purchase;palm oil;real gdp;financing cost;corporate profit;export share;credit market;external position;Social Welfare;energy subsidies;global growth;commodity export;global energy;investor confidence;price pressure;real investment;credit growth;manufacturing export;social spending;coal export;liquidity risk;real trade;investment lending;currency depreciation;state revenue;taxable income;consumption growth;income threshold;export tax;global context;macroeconomic indicator;coal import;public finance;global environment;Cardiovascular Disease;budget amount;investment spending;subsidy policy;macroeconomic projection;budget deficit;budget balance;consumer goods;liquidity condition;official reserve;bond issuance;bank deposit;gross debt;real adjustment;real growth;capital loan;international market;yield curve;primary market;contingent financing;fiscally sustainable;fiscal benefit;seasonal pattern;annual expenditure;budget approval;financing need;electricity subsidies;total energy;fiscal impact;macroeconomic assumption;individual taxpayer;cash reserve;net export;high spending;international energy;reform reform;compensatory measure;domestic financing;foreign financing;corporate sector;defined benefit;macroeconomic impact;economic sector;fiscal position;external exposures;physical exercise;motor cycle;death benefit;industrial production;goods export;external account;inflationary expectation;rice price;price level;average inflation;sector output;total fuel;administrative body;external financing;job mobility;future workforce;health needs;macro stability;regulatory environment;support system;capital imports;poor household;economic shock;work accident;feedback systems;downward pressure;price growth;distribution list;federal reserve;currency index;government financing;currency reserve;fiscal spending;unemployment rate;administrative support;petrol price;Macroeconomic Policy;Fiscal Sustainability;trade surplus;fixed investment;high frequency;consumer confidence;food staple;investment growth;gdp deflator;trade deficit;capital good;export revenue;price adjustment;commercial properties;property lending;foreign holding;commodity currency;positive impact;substantial inflow;organizational design;asset share;global economy;global financial;capacity constraint;government bureaucracy;equity price;upward pressure;global policy;resource sector;negative effect;project revenue;staff productivity

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Citation

Indonesia economic quarterly : adjusting to pressures (English). Indonesia economic quarterly Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/416081468337906857/Indonesia-economic-quarterly-adjusting-to-pressures