World Bank2014-04-022014-04-022013-12https://hdl.handle.net/10986/17609The 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 longer-term 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. This document summarizes the findings of the IEQ for the last quarter of 2013. The final quarter has seen the continuing adjustment of the Indonesian economy to more subdued commodity prices and tighter external financing conditions, and to the related pressures on external balances. Policies have responded, particularly through tighter monetary conditions, the currency has depreciated substantially in real terms, and investment spending and output growth have weakened. These developments are broadly supportive of continued macroeconomic stability, including by helping to lower the current account deficit, although their impact continues to play out, adding additional uncertainty to the path of the domestic economy. At the same time, the international environment is also shifting, with global growth expected to improve, bringing potential policy changes, notably in US monetary policy, which could add to the pressures on Indonesia's external financing position. In light of the slower pace of growth, and the risks facing the economy, there is a strong need for Indonesia to augment the recent macro focus on tighter monetary policy, exchange rate adjustment and import compression, with deeper reforms to lift export performance and support investment inflows.en-USCC BY 3.0 IGOACCOUNTINGASSET PRICEASSET PRICESASSETSBALANCE OF PAYMENTSBALANCE OF PAYMENTS DEFICITBALANCE SHEETSBANK CREDITBANK NOTEBANKING SECTORBASIS POINTSBILLBOND MARKETBOND SPREADSBOND YIELDSBORROWING COSTSCAPITAL FLOWSCAPITAL FORMATIONCAPITAL GOODSCAPITAL GOODS IMPORTSCAPITAL INFLOWSCENTRAL BANKCHECKSCOMMERCIAL BANKCOMMERCIAL BANK LENDINGCOMMODITY PRICECOMMODITY PRICESCONSUMER INFLATIONCONSUMER PRICE INDEXCONSUMPTION BASKETCONSUMPTION EXPENDITURECONSUMPTION GOODSCONSUMPTION GROWTHCORE INFLATIONCORPORATE BONDCREDIT GROWTHCREDIT LIMITSCURRENCYCURRENCY DEMANDCURRENCY DEPRECIATIONCURRENCY INFLOWSCURRENCY MARKETCURRENCY MISMATCHESCURRENCY RISKSCURRENT ACCOUNTCURRENT ACCOUNT BALANCECURRENT ACCOUNT DEFICITDEBT REPAYMENTSDEBT SERVICINGDECENTRALIZATIONDEPOSITDEPOSITSDEPRECIATIONDEPRESSING EFFECTDEVELOPING COUNTRYDIRECT INVESTMENTDISBURSEMENTDISINFLATIONDOLLAR PRICEDOLLAR VALUEDOMESTIC BANKDOMESTIC BANKING SECTORDOMESTIC BANKSDOMESTIC CREDITDOMESTIC DEMANDDOMESTIC DEMAND GROWTHDOMESTIC ECONOMYDOMESTIC INTEREST RATESDOMESTIC MARKETDOMESTIC PRICEDOMESTIC PRICESDOWNWARD PRESSUREECONOMIC CONDITIONSECONOMIC DISRUPTIONECONOMIC GROWTHECONOMIC POLICYECONOMIC RISKSEMERGING MARKETEMERGING MARKET ECONOMIESEMERGING MARKETSEQUILIBRIUMEQUILIBRIUM LEVELEQUIPMENTEQUITY INDICESEXCESS LIQUIDITYEXCHANGE RATEEXCHANGE RATE VOLATILITYEXPORT COMMODITIESEXPORT COMPETITIVENESSEXPORT EARNINGSEXPORT PERFORMANCEEXPORT VOLUMESEXPORTERSEXPOSUREEXTERNAL BALANCEEXTERNAL BALANCESEXTERNAL DEBTEXTERNAL DEMANDEXTERNAL FINANCINGFEDERAL RESERVEFINANCIAL INSTITUTIONSFINANCIAL MARKETFINANCIAL MARKET PARTICIPANTSFINANCIAL STABILITYFINANCING REQUIREMENTSFISCAL DEFICITFISCAL POLICYFISCAL REFORMSFLEXIBLE EXCHANGE RATEFOOD PRICEFOOD PRICESFOREIGN BANKSFOREIGN CURRENCYFOREIGN CURRENCY LENDINGFOREIGN CURRENCY LOANSFOREIGN DIRECT INVESTMENTFOREIGN INVESTMENTFOREIGN INVESTORFOREIGN RESERVESGLOBAL DEMANDGLOBAL ECONOMYGLOBAL LIQUIDITYGLOBAL MARKETGOVERNMENT BONDSGOVERNMENT DEBTGROSS DOMESTIC PRODUCTGROWTH PERFORMANCEGROWTH RATEGROWTH RATESIMPORTIMPORT COMPRESSIONIMPORT COSTSIMPORT DEMANDIMPORT GROWTHIMPORT PRICESIMPORTSINCOME GENERATIONINCOME GROWTHINFLATIONINTEREST RATEINTERNATIONAL BANKINTERNATIONAL COMPETITIVENESSINTERNATIONAL FINANCIAL MARKETINTERNATIONAL MARKETINTERNATIONAL PRICESINVESTMENT CLIMATEINVESTMENT INFLOWSINVESTMENT POLICYINVESTMENT SPENDINGINVESTOR CONFIDENCELABOR FORCELABOR MARKETLIQUIDITY CONDITIONSLOCAL CAPACITYLOCAL CURRENCYLOCAL CURRENCY LOANSMACROECONOMIC ADJUSTMENTSMACROECONOMIC STABILITYMARKET DEVELOPMENTSMARKET LIQUIDITYMARKET PARTICIPANTSMARKET SHAREMARKET TURNOVERMONETARY CONDITIONSMONETARY POLICYMORTGAGEMORTGAGESNATURAL RESOURCENOMINAL DEPRECIATIONOIL PRICESOUTPUT GAPSPORTFOLIOPORTFOLIO INVESTMENTPOVERTY REDUCTIONPRICE HIKEPRICE INCREASEPRICE INCREASESPRICE INDEXPRICE INFLATIONPRIVATE CONSUMPTIONPUBLIC EXPENDITUREPUBLIC INVESTMENTREAL DEPRECIATIONREAL EXCHANGE RATEREAL INTERESTREAL INTEREST RATERECESSIONRELATIVE PRICESAFETY NETSHORT-TERM RATESSLOWDOWNSOVEREIGN DEBTSPOT MARKETSPOT RATESTOCK PRICESSTRUCTURAL REFORMSUPPLY-SIDESURPLUSTARIFF INCREASESTAXTOTAL EXPORTTOTAL EXPORT REVENUESTOTAL EXPORTSTOTAL EXTERNAL DEBTTOTAL IMPORTTOTAL IMPORTSTRADE BALANCETRADE BALANCESTRADE DATATRADE DEFICITTRADE FACILITATIONTRADE RESTRICTIONSTRADE SURPLUSTRADINGTRADING PARTNERTRADING PARTNERSUNCERTAINTIESUNCERTAINTYUNEMPLOYMENT RATEUPWARD PRESSURE10.1596/17609