Part 1 – The current economic environment INDONESIA’S CURRENT ACCOUNT CHALLENGE Richard Dutu Economist, Indonesia Desk OECD Economic Department

1.The current economic environment

GDP growth has been trending down recently. GDP growth,

Yet Indonesia remains well placed regarding recent GDP/capita growth. Average GDP per capita growth,

Growth is supported by consumption as both investment and export growth have slowed. Contributions to GDP growth,

Export growth is down due to lower commodity prices. Commodity prices Metal price indexThermal coal prices

Indonesia exports to the entire world, but China and Japan account for 27%. Major trading partners

Credit growth is strong and steady. Credit to the economy

The fiscal balance remains sustainable. Government fiscal balance,

As is Indonesia’s government debt. Government debt, % of GDP of selected countries

Inflation, Inflation is edging up, pushed by food prices.

Inflation decomposition, Although transportation, communication and finance have contributed recently.

Exchange rate and international reserves, The rupiah has depreciated dramatically in recent months.

Interest rates, And Bank Indonesia has had to raise rates.

Indonesia’s yields have gone significantly higher than its neighbours. Change in 10-year bonds yield

Equity prices, Equities have underperformed in the region recently.

Foreign capital flows in Rupiah portfolio, After recovering, capital inflows slowed in November. Source: Bloomberg