– Trade Policy – 2013
Indonesia is Asia’s fifth
largest economy, the fourth most populous nation in the world and endowed with
abundant natural resources. Strong macroeconomic performance can be attributed
to successful policy management and to the substantial reforms undertaken since
the Asian crisis that strengthened the macroeconomic framework and liberalized
the international trade regime. Considerable investments in network industries
have boosted potential output, and further improvements are expected with the
gradual implementation of the Master Plan for the Acceleration and Expansion of
Indonesia’s Economic Growth.
Indonesian economy was
continuously improving during 2010, bolstered by solid domestic demand and
favourable external condition. The global economic recovery that began gaining
traction during the first half of 2009 progressed further during 2010,
underpinned by vigorous growth in emerging market nations. This upward trend
was accompanied by sustained increases in global commodity prices that have
increased inflationary pressure, particularly in emerging market economies. In
advanced economies, however, economic growth is relatively limited, accompanied
by low inflationary pressure. This condition prompted emerging markets to start
monetary tightening by implementing macro prudential policies and raising
policy rates. In contrast, advanced countries have generally opted for
maintaining a loose monetary stance by holding interest rates down, while some
countries have even injected their economies with substantial amount of
liquidity (quantitative easing). The difference in the crisis responses between
emerging market countries and the developed world spurred massive capital
inflows to emerging market economies, including Indonesia.
Indonesia also plays a much
bigger role in the global economy. Currently, it ranks 17th as the world’s
largest economy. Indonesia will continue its significant involvement in many
regional and global forums, e.g. WTO, ASEAN, APEC, G-20 and other bilateral
activities. In 2013, Indonesia will be a host country for APEC Summit Meeting
(October 2013) and WTO Ministerial Conference IX (December 2013) in Bali.
Indonesia had successfully overcome the 2008’s global economic crisis, which
was highly praised by international economic agencies. While other countries
experienced their debt rating being down-graded, Indonesia on the contrary
improved its debt rating significantly.
AND TRADE ENVIRONMENT
economic and policy development
The near-term global economic
outlook is fragile and emerging economies, including Indonesia, again face the
risk of a potential crisis that is not of their making. The growth outlook for
Indonesia’s major trading partners (MTP), at 3.3% in 2012, remains relatively
weak as increased Euro zone uncertainty adds to the ongoing drags on global
growth from budget cutting and deleveraging in developed economies, and
capacity constraints in some developing economies. Recent international
financial market turbulence looks set to continue in the near-term and, while
this baseline scenario remains the most likely outcome, capital flows to
emerging economies and sentiment are likely to remain volatile. Further
enhancing crisis preparedness is therefore a policy priority for economies such
as Indonesia but, at the same time, it is important to push ahead with reforms
and investments which can support medium-term growth in what is likely to be a
weaker global economic environment.
In 2011, the Indonesian
economy showed excellent performance in the midst of the global economic
slowdown, Europe debt crisis, climate change and natural disasters on a global
level, as well as political tensions in the Middle East and North Africa.
Indonesia's economy grew by 6.5 in 2011, the highest in the period 2007-2011,
and it was the highest growth rate since the economic crisis in 1997/1998.
Economic growth in 2011 was mainly supported by domestic resiliency in the form
of increased investment, a stable purchasing power, and the growth of exports
of goods and services. From the expenditure side, economic growth in 2011 was
primarily driven by investment in the form of Gross Fixed Capital Formation as
well as exports of goods and services that grew respectively by 8.8% and 13.6%.
Purchasing power was maintained, people’s consumption and government
consumption grew respectively by 4.7 and 3.2%. From the field of business side,
the economic growth of 6.5% was mainly sourced from non-oil manufacturing
sector, agriculture and trade, hotels, and restaurants as well as transport and
communication sectors grew respectively by 6.8%, 3%, 9.2% and 10.7%.
The improved performance of
non-oil industries became the driver of economic growth from the production
side. In the whole year of 2011, non-oil manufacturing grew by 6.8% and was
primarily driven by base metals, iron and steel; food, beverages, and tobacco;
textiles, leather goods, and footwear; cement and mining, as well as
transportation vehicle, machinery, and equipment. The improvement of this
non-oil manufacturing industry will generate optimism of resurgent of
industrial sector as a driver of the economy, after non-oil manufacturing
industry slowdown since 2006.