Publication: Indonesia Economic Quarterly, December 2014 : Delivering Change
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2014-12
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2015-01-05
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The Indonesia Economic Quarterly (IEQ) has two main aims. First, it reports on the key developments over the past three months in Indonesia s economy, and places these in a longerterm and global context. Based on these developments, and on policy changes over the period, the IEQ regularly updates the outlook for Indonesia s economy and social welfare. Second, the IEQ provides a more in-depth examination of selected economic and policy issues, and analysis of Indonesia s medium-term development challenges. It is intended for a wide audience, including policymakers, business leaders, financial market participants, and the community of analysts and professionals engaged in Indonesia s evolving economy.
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“World Bank. 2014. Indonesia Economic Quarterly, December 2014 : Delivering Change. © http://hdl.handle.net/10986/21086 License: CC BY 3.0 IGO.”
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Publication Indonesia Economic Quarterly, December 2015(Washington, DC, 2015-12)The Indonesia Economic Quarterly (IEQ) has two main aims. First, it reports on the key developments over the past three months in Indonesia’s economy, and places these in a longerterm and global context. Based on these developments, and on policy changes over the period, the IEQ regularly updates the outlook for Indonesia’s economy and social welfare. Second, the IEQ provides a more in-depth examination of selected economic and policy issues, and analysis of Indonesia’s medium-term development challenges. It is intended for a wide audience, including policymakers, business leaders, financial market participants, and the community of analysts and professionals engaged in Indonesia’s evolving economy. This paper discusses about the economic conditions of Indonesia for the year 2015. Emerging market assets rebounded in October 2015 after the sharp losses recorded in August and September, when the uncertainty about the Chinese economic slowdown and the U.S. interest rate outlook was particularly high. Despite a more favorable market sentiment, capital flows to emerging economies have remained weak and borrowing costs relatively high. In addition to tight financing conditions, Indonesia faced subdued external demand for its exports in the near term and persistently low commodity prices over the medium run. In 2015, fire in Indonesia cost nearly twice that of reconstruction following the 2004 tsunami in Aceh. Agriculture and forestry have sustained losses and damages in trillions. Sustained exposure to haze could also lead to the volcano effect, i.e., a decrease in plant productivity in the short term due to limited sun exposure and a deleterious effect on plant physiology and photosynthesis. The recurring nature of Indonesia’s fire crisis is of particular concern. Another potential step in Indonesia’s new reform process was the country’s signaling its intention to join the Trans-Pacific Partnership (TPP) agreement in the near future. Whether membership materializes or not, the agreement is likely to have a limited impact on trade, because import tariffs in member countries are already low and Indonesia has trade agreements with most of them.Publication Global Economic Prospects, January 2010(World Bank, 2010)The world economy is emerging from the throes of a historically deep and synchronized recession provoked by the bursting of a global financial bubble. The consequences of the initial bubble and the crisis have been felt in virtually every economy, whether or not it participated directly in the risky behaviors that precipitated the boom-and-bust cycle. And while growth rates have picked up, the depth of the recession means that it will take years before unemployment and spare capacity are reabsorbed. This year's global economic prospects examines the consequences of the crisis for both the short and medium term growth prospects of developing countries. It concludes that the crisis and the regulatory reaction to the financial excesses of the preceding several years may have lasting impacts on financial markets, raising borrowing costs and lowering levels of credit and international capital flows. As a result, the rate of growth of potential output in developing countries may be reduced by between 0.2 and 0.7 percentage points annually over the next five to seven years as economies adjust to tighter financial conditions. Overall, the level of potential output in developing countries could be reduced by between 3.4 and 8 percent over the long run, compared with its pre-crisis path. The report further finds that the very liquid conditions of the first half of the decade contributed to the expansion in credit available in developing countries and that this expansion was responsible for about 40 percent of the approximately 1.5 percentage point acceleration of the pace at which many developing-country economies could grow without generating significant inflation. While developing countries probably cannot reverse the expected tightening in international financial conditions, there is considerable scope for reducing domestic borrowing costs, or increasing productivity and thereby regaining the higher growth path that the crisis has derailed.Publication India Economic Update, September 2012(Washington, DC, 2012-09)Real gross domestic product (GDP) growth has slowed to a nine year low of 6.5 percent for FY2011-12, from 8.4 percent in the two previous years. The slowdown was most pronounced in the industrial sector, and more specifically in manufacturing and mining. In the quarter ending in June 2012, industrial output growth as measured by the Index of Industrial Production (IIP) has been negative. The contraction was particularly pronounced in the production of capital goods, which is in line with falling investment demand on the expenditure side of the National Accounts. The current account deficit reached a record 4.2 percent of GDP in FY2011-12, because of decelerating export growth and high crude prices. Merchandise exports grew by 41 percent in September 2011, but their growth slowed to 2 percent by August 2012 (measured as 12-months cumulative exports compared with the same 12 months of the previous year). Inflation reached 7.6 percent in August 2012. This represents a marked slowdown since September 2011, but there has been an uptick in food prices in recent months. Also, higher domestic prices for fuel, which are necessary to rein in spending on subsidies, will contribute to inflationary pressure. Inflation is therefore expected to reach 8 percent at end-March 2013. Real GDP growth is forecast to reach around 6.0 percent in FY2012-13, after 5.3 percent growth Q4 of FY2011-12 and 5.5 percent growth in Q1 of FY2012-13. The slowdown is at least partly caused by structural problems. These include power shortages, which are partly caused by the financial difficulties facing the electricity sector as discussed in the special topic section of this update, the corruption scandals that have hit the mining and telecom sectors, investor uncertainty because of pending changes in legislation (mining, taxes, land acquisition), and the tightening constraints of land and infrastructure. Tighter macroeconomic policies, slow growth in the core Organization for Economic Co-operation and Development (OECD) countries, and worries about another global recession also weigh on growth. Important signals to revive domestic growth drivers to lift sentiment more than produce instant efficiency gains could come from reforms recently announced and, more importantly, the reform of direct taxes, the implementation of the long-delayed Goods and Services Tax (GST), and passage of the land acquisition and mining bills. This update also looks closely at two important topics for medium- and long-term growth, namely India's Right to Education (RTE) Act, which aims to shape elementary education, and the financial difficulties in the Indian power sector.Publication South East Europe Regular Economic Report, January 2015 : Coping with Floods, Strengthening Growth(World Bank, Washington, DC, 2015-01)Coping with Floods, Strengthening Growth, from the South East Europe Regular Economic Report explains that South East Europe s (SEE6) s economy is estimated to have stagnated in 2014 on the back of flood-induced contraction in Serbia and a sharp slowdown in Bosnia and Herzegovina and Montenegro. The regional economy grew 0.2 percent in 2014, insufficient to improve living standards or to make a dent in the region s high unemployment rate. External demand for SEE6 exports was a key positive contributor to economic growth in 2014 as the region s exports gained market share, despite the weak Eurozone performance and disappointing global recovery. Domestic demand remained subdued because of delayed or reduced public and private investments and weak consumption. Devastating floods in large parts of the region further weighed on the SEE6 economic activity in 2014. The weak regional economic performance masks notable differences among the SEE6 countries. In 2014, the Serbian economy is estimated to have contracted by 2 percent for a third time since the global crisis and Bosnia and Herzegovina is stagnating. Economic growth rates in Kosovo and Montenegro are estimated to have moderated in 2014. Only Albania and FYR Macedonia showed signs of a more sustained recovery on the back of increasing exports, particularly in the second half of the year. The floods were the main culprit behind the weak domestic demand and the overall sluggish economic performance in SEE6. Robust exports only partially offset the SEE6 s weak domestic demand, leaving external imbalances in vulnerability. The average fiscal deficit in SEE6 is estimated to have increased by 0.4 percent of GDP to 4.2 percent in 2014 due to faster growth in expenditures than revenues. The SEE6 region as a whole is projected to grow 1.3 percent in 2015, supported by a slowly recovering external demand, especially in Europe, and stabilization of international energy prices at around current levels.Publication Thailand Economic Monitor, April - June 2009(Bangkok, 2009)A solid financial armor could not protect Thailand against the impact of the global financial crisis on its real economy. Despite a sound banking system and low external vulnerabilities, the Thai economy contracted 5.7 percent between October 2008 and March 2009, as the magnitude and speed of the contraction in foreign demand, and resulting shock to the real economy, has been greater than anticipated. There continues to be little impact of the global financial crisis on Thailand's banks: liquidity remained adequate as financial institutions did not face solvency concerns given their adequate capitalization and lack of exposure to 'toxic' assets or risky derivative contracts. The combination of a sound financial sector, low external roll-over and balance-of-payment financing requirements, and, more recently, large current account surpluses, has led to capital inflows, build-up in reserves and an appreciation of the Baht relative to other currencies in the region. However, the impact of the global crisis on the real sector was far more severe than expected. Export volumes contracted by 8.9 percent in the fourth quarter of 2008, compared to the World Bank's forecast in December of a 3.0 percent expansion. Exports contracted a further 16 percent in the first quarter of 2009. The aggravation of Thailand's political crisis, which had been dampening investor and consumer confidence since 2006, compounded the shock to the real economy. As a result, real gross domestic product (GDP) contracted in the fourth quarter of 2008 and first quarter of 2009 after 38 quarters of growth, and is expected to contract for 2009 as a whole, the first annual contraction since the Asian financial crisis of 1997-1998.
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Latest estimates suggest that about 5.1 million people—equivalent to 2.4 percent of the working-age population—have lost their jobs, while an additional 24 million have had to work reduced hours due to the pandemic. As many as 50 percent of workers have experienced a reduction in earnings. The impact on living standards has been devastating, with more than 2.2 million Indonesians estimated to have been pushed into COVID-19-induced poverty in 2020. One unexpected silver lining from the crisis, however, has been the turbo-charged adoption of digital technologies. Businesses, both large and small, have flocked to digital technologies to try to ensure the continuity of their operations. School closures have forced students and teachers to adapt and explore digitally enabled remote learning options, including the adoption of a variety of EdTech solutions. HealthTech apps enabling remote consultations and the delivery of medicine have seen unprecedented growth in adoption rates. Confined at home due to mobility restrictions, Indonesians have switched to the internet for their entertainment and social needs, driving sharp growth in the usage of digital media (music and video streaming) and communications applications. With this pandemic-induced flight to digital expected to be permanent to a large extent, there is excitement about an even greater acceleration in what was already the fastest growing digital economy in Southeast Asia. But at the same time questions have also emerged about the possibility of the differential access to and adoption of digital technologies compounding existing inequalities. For a country that considers achieving balanced development one of its key priorities, this is an important new challenge.Publication Mini Grid Solutions for Underserved Customers(Washington, DC: World Bank, 2024-02-21)Traditionally, mini grids have been viewed as “off-grid” systems that are built and operated solely for communities without electricity. 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Drawing on extensive discussions with pioneering developers, the book showcases detailed case studies from Nigeria and India, shedding light on the challenges and opportunities of interconnected and non-interconnected undergrid mini grids. The authors address technical issues of grid interconnection and delve into the policy and regulatory considerations crucial for the financial sustainability and success of undergrid mini grids. The book is an invaluable resource for policy makers, energy practitioners, and researchers seeking practical insights to bridge the electricity access gap, empower communities with reliable and affordable electricity, and drive environmentally and commercially sustainable development. • “The report is rich with insight, not least because the authors have been able to contrast the Nigeria and India approaches taken by the respective private sectors in each country. The five case studies are very valuable. The authors have powerfully illustrated the importance of the policy and regulatory framework and how that translates into investor behavior.” — Mohua Mukherjee, Senior Research Fellow, Oxford Institute of Energy Studies • “This great report represents a pivotal turning point in the history of energy and has global implications for the role of mini grids for communities that have been poorly served by main grid utilities.” — Peter Lilienthal, Founder HOMER Energy • “This is a tremendous addition to the literature on mini grids and an important guide for all of us practitioners working in this area.” — James Sherwood, Director of Research & Innovation, RMI | Global South Program • “This refreshingly honest and open report provides an excellent overview of interconnected and isolated mini grids, as well as a thorough analysis of key ground-level implementation issues in regulation, business, and engineering.” — Joanis Holzigel, Chief Operating Officer, INENSUSPublication Health Financing in Indonesia : A Reform Road Map(World Bank, 2009)Indonesia is at a critical stage in the development and modernization of its health system. The government of Indonesia has made major improvements over the past four decades, but struggles to maintain and continue to improve important health outcomes for the poor and achieve the Millennium Development Goals. Nevertheless, some key health indicators show significant progress. Infant and child (under five) mortality rates have fallen by half since the early 1990s, although the speed of the decline appears to have slowed since 2002. Maternal mortality rates show a declining trend, but remain among the highest in East Asia. Indonesia's population program is one of the worlds most successful: fertility rates have declined impressively since the 1970s and continue to fall. Previously declining malnutrition rates among young children have, however, stagnated. The slowing down of progress may be explained by a poorly functioning health system as well as by new and ongoing challenges posed by demographic, epidemiological, and nutrition transitions, which require new policy directions, a reconfigured and better performing health system, and long-term sustainable financing.