Indonesia

Current Economic Outlook

Low dependence on exports and relatively strong consumption have helped Indonesia maintain modest economic growth despite the global recession and volatile asset markets. The economy rebounded in Q2 2009, helped by public and private spending. Declining exports and weak investment will nevertheless keep GDP growth subdued at 4.2% in 2009. Given RGE’s baseline scenario of a U‐shaped U.S. recovery, Indonesia will grow 4.8% in 2010 due to sluggish recovery of exports and foreign direct investment (FDI). In case of a “double‐dip” recession in the U.S. or a correction in global asset markets, Indonesia's exports and asset markets will take a hit, leading to a much slower growth. RGE’s baseline scenario for Indonesia is a shallow U‐shaped recovery. Strong consumer spending, portfolio inflows and faster implementation of the fiscal stimulus will help Indonesia recover faster than other Southeast Asian economies. But given RGE's outlook for a weak recovery in the U.S. economy, global commodity prices and FDI flows, Indonesia isn’t likely to see 5%‐6% growth again until 2011. Growth prospects will also depend on the success…

Read the latest RGE Global Economic Update.