Rounding up 2013: The Vulnerable Indonesia

Abstract

In general, 2013 has highlighted the vulnerability of Indonesian economy. Economic growth is slower than anticipated, while inflation has elevated, on the back of a sharp increase in fuel prices. Moreover, as prices of export commodities remained drops and the non-resident investors reduced their holdings in emerging markets, including Indonesia, in the expectation that the US would reduce its monetary stimulus, the external accounts deteriorated in the first three quarters,partly contributing to a fall in the rupiah and local stocks. Meanwhile, steps to tighten monetary policy taken to address inflation and the current account deficits ar expected to restrain growth in the near term.