Sunday, 23 February 2014

INDONESIA’S ECONOMIC REVIEW 2013 AND OUTLOOK 2014



The Central Statistics Board [BPS] had exposed their latest data and analysis and from here projection could be made of Indonesia’s economic performance 2014. Indonesia’s GDP of 2013 grew by 5.78% against that of 2012. GDP is total value of goods and services produced by a nation over a certain period. Spending was made by the Government, private sector, and household.

Growth was posted at all economic sectors, with highest growth in the Transportation and Communication sectors, i.e. 10.9 percent and the lowest in Mining and Excavation 1.34%.

Meanwhile GDP minus oil-gas in 2013 grew by 6.25%. Indonesia’s GDP in 2013 based effective price came to Rp9,-84.0 trillion, whilst GDP on the basis of constant price [year 2000] came to Rp2,770.3 trillion.

On quarterly basis, Indonesia’s GDP in quarter IV – 2013 compared to quarter III-2013 [q-to-q] inched down by 1.42 percent but compared to quarter IV-2012 [y o y] grew by 5.72%.

Indonesia’s economic growth in 2013 in terms of expenditure was in export of goods and services amounting to 5.30% followed by household expenditure 5.28%, Government’s Consumption Expenditure which grew by 4.87%, and Gross Fixed capital [PMTB] component 4.71%. Meanwhile, import as reduction factor posted growth of 1.21%.

In 2013, GDP was spent on Household Consumption Expenditure 55.82 percent, Government Consumption 9.12%, Gross Fixed Capital or Physical Investment 31.66%, export 23.74% and import 25.74%

Pprice-based per capita GDP effective per 2013 came Rp36.5 million, and increase compared to per capita GDP in 2012 posted at Rp33.5 million. As noted 57.78% of GDP of quarter IV-2013 was contributed by Java in the following order by province: Jakarta, East Java and West Java.

By quantity, activities in secondary and tertiary level was still concentrated in Java, while activities of the primary sector was concentrated in outside Java.

Meanwhile Indonesia’s economy in quarter IV-2013 described GDP wise on the basis of constant price 200 went down by 1.42% against previous quarter [q to q]. The downturn followed three monthly pattern, i.e. contraction in quarter IV after posting increase in quarter III.

Contraction in quarter IV-2013 was because the agro sector was posting significant downturn i.e. electricity, gas and clean water due to seasonal cycle. Meanwhile others sectors through quarter IV-2013 were posting positive growth, i.e. electricity, gas and clean water growing by 4.45%, transportation and communication growing by 2.36%. the processing industry sector grew by 1.72%, mining and excavation sector grew by 1.72%, general service sector grew by 1.62%; Trading, Hotel, Restaurant growing by 1.44% and the Finance, Real Estate and Company Services grew by 0.50%.

The conclusion Indonesia’s economy in 2013 posted growth of 5.78%, meaning below the target of 6.3%. Somehow this attainment was notably high considering the deficit factor in current transaction. Still, this growth lacked of quality as it was not sustained by the tradable sector. The result was low employment. The tradable sector consisted of agriculture, mining and manufacturing industry.

To Bank Indonesia, the policy to anticipate tight money policy and to manage Rupiah value had shown their result in export  which grew by 7.4%, while the import sector inched down by 0.6%. The result was visible increasing surplus in trade balance of quarter IV 2013.

I was true that economic growth of 5.78% was notably high, even above prediction of some circles who predicted growth at only 5.6%. However, economic growth should not be judged quantitatively but also qualitatively. The reason was that economic growth did not create job opportunities and reduce poverty and in the end social gap widened.

It happened because growth was supported by non tradeables which on the average grew above GDP itself, while average growth of tradable  was below GDP growth. Evidently the economic growth of 5.78% was not followed by reduced poverty.

Poverty even tend to grow. In March 2013, poverty was posted at 11.37%, but in September 2013 poverty jumped up to 11.47%.

So this year’s economic strategy should be more high-growth orientated through monetary fiscal mixed strategy which tend to be loose although in some certain area tightening was still necessary  to minimize deficit in current transaction and suppress inflation so economic growth potential could be uplifted to 5.8% - 6.2% and inflation controlled to around 5.5%% - 6.0%.

In tandem with the above, the tradable sector must be prioritized especially through fiscal policy based on APBN State Budget so a higher and better quality economic growth could be attained to generate wide multiplier effect. Economic growth achievement of 2013 should be a good asset to start with to embark on 2014 amidst stormy political atmosphere. (SS)

Business News - February 12, 2014        

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