Briefing Notes for the Launch in Jakarta, March 2009
- Growth decelerated slightly in Indonesia, from 6.3% in 2007 to 6.1% in 2008.
- After growing at 6.4% in the second and third quarter of the year (year-on-year), GDP
decelerated to 5.3% in the fourth quarter.
- Exports dropped significantly towards the end of 2008: -2.4% in November (year-onyear),
-20.6% in December and -36.1% in January 2009.
- The rate of growth of private consumption remained high in 2008 (5.3%), though it
dropped gradually through the year, from 5.7% in the first quarter to 4.8% in the fourth
- The rate of growth of gross fixed investment was rather high in 2008 (11.7%), but it
also dropped during the year, from 13.7% in the first quarter to 9.1% in the fourth
- Government consumption increased significantly from 3.9% in 2007 to 10.7% in 2008,
contributing to keeping GDP growth at similar levels than the year before.
- As of the beginning of March, GDP growth was forecast to be 3.5% in 2009, the lowest
Inflation, monetary policy and exchange rate developments
- Reflecting dramatic price increases in international commodity markets in the first half
of 2008, Indonesia’s inflation rate increased from an average of 6.4% in 2007 to 10.7%
in the second quarter of 2008 (year-on-year) and 13.4% in the third quarter.
- However, inflation decelerated towards the end of 2008, as the price of crude oil and
other commodities plunged, reaching 9.3% in February 2009.
- Tracking developments in inflation, the central bank increased its policy rate six times,
from 8% in May to 9.5% in October, before cutting it by 25 basis points in December,
and by 50 basis points each time in January, February and March to 7.75%.
- The combination of drops in exports and cuts in interest rates contributed to a
depreciation of the exchange rate from an average of 9,240 rupiah per dollar in the first
three quarters of 2008 to 10,930 in the fourth quarter, and 11,800 in February 2009.
- Indonesia held $53.7 billion in foreign exchange reserves as of the first week of March
2009, down from $56.4 billion a year before.
Fiscal situation and perspectives
- The budget deficit decreased slightly 1.3% of the GDP in 2007 to 1.2% in 2008.
- In January 2009 the Government announced a stimulus package of Rp71.3 trillion
($6.1 billion, 1.4% of the GDP), which enhances a previous Rp27.5 trillion stimulus
package and includes the following elements:
- Tax breaks for individuals and companies (Rp 43 trillion).
- Waived import duties and taxes (Rp 13.3 trillion).
- Infrastructure spending (Rp10.2 trillion).
- Diesel subsidy (Rp 2.8 trillion).
- Rural development (Rp0.6 trillion).
- The package was approved by the House of Representatives in February 2009,
increasing its value by an additional Rp2 trillion to be devoted to infrastructure