Mounting Economic Challenges

Abstrak

The economic growth for 2012 remains high at 6.2% but slightly lower than the 2011 growth of 6.5%. The slowing down of growth was witnessed in the second half of 2012. The remaining of his second term, President Susilo Bambang Yudhoyono, faces serious challenges, namely increased fuel subsidy, widening current account deficit, the depreciation trend of Rupiah, high inflation and increases in minimum wage.

Albeit the challenges, several factors can contribute to the sustained high growth. First, the global economic recovery, albeit limited. Second, the recovery of commodity prices albeit below the pre-crisis level. Third, the investors" confidence on Indonesian economy remains as indicated by high investment growth, both in portfolio and direct investments.

This report also discusses the recent trade regulations, which continues the recent trend of protectionism and has resulted in high inflation.