Arab Today, arab today qnb group indonesias economy continues to slow
Last Updated : GMT 07:31:22
Arab Today, arab today
Arab Today, arab today

QNB group: Indonesia's economy continues to slow

Arab Today, arab today

Arab Today, arab today QNB group: Indonesia's economy continues to slow

QNB group
Doha - QNA

The new administration of Indonesian President Joko Widodo that will be inaugurated on October 20, will face a number of major economic challenges.
Real GDP growth slowed to 5.1% in Q2 2014 amidst declining exports and a slowdown in investment (although this may be partly related to the elections), a QNB press release said.
The new administration will be constrained in its ability to respond to the unfavorable global environment, where rising short-term interest rates in advanced economies could lead to further capital outflows from emerging markets. We therefore expect Indonesia’s real GDP growth to slow further in 2014-15. Nonetheless, Indonesia's long-term potential remains large if these challenges can be overcome.
The tightening of global liquidity emanating from the tapering of Quantitative Easing (QE) in the US has led to periodic bouts of capital outflows from Indonesia since mid-2013 as well as a weaker exchange rate.
In response, the central bank has hiked interest rates to combat inflation and used international reserves to support the currency, while the government has introduced export restrictions on raw minerals. This has contributed to a widening of the current account deficit to 4.3% of GDP in Q2 2014 at the same time as the economy slowed.
The authorities are relatively constrained in the stimulus they can provide to the economy in order to counteract this slowdown. The budget deficit (projected at 2.4% of GDP for 2014) is close to the statutory limit (3.0%) imposed by law.
In addition, the latest data suggests that Indonesia experienced portfolio outflows in August (see our Economic Commentary dated September 7, 2014).
 There is, therefore, little room to cut interest rates or raise public spending. The new administration plans to cut fuel subsidies to free up resources for spending on public services and infrastructure investment. However, the administration only controls about a third of the seats in parliament through its coalition party. It may, therefore, be difficult for Jokowi to garner the necessary support to cut fuel subsidies.
Furthermore, the US Federal Reserve is expected to raise interest rates in 2015, which could spark another round of capital outflows, leading to a weaker currency and tighter monetary policy. This would have a negative impact on domestic demand.
Indonesia’s short-term outlook is therefore bleak. Real GDP growth is likely to slow down further for the remainder of 2014 and 2015 to below 5%. However, the reforms of the new administration, if implemented, are likely to provide positive dividends for growth and investment over the medium term.
Additionally, exports not covered by restrictions should also recover as the weaker currency supports Indonesian competitiveness and as global demand recovers. Export restrictions may also be lifted in time and some companies have already been exempted.
This should lift growth back up above the 5% level by 2016. Beyond that, the main challenge will be to address the underinvestment in infrastructure, which has resulted in congested transport systems and shortages of power and water (see our Economic Commentary from July 26). This adds to the cost of doing business, erodes competitiveness, discourages investment and reduces Indonesia’s growth potential.
With a rich endowment of natural resources and a large, growing, young and increasingly wealthy population, the long-term potential in Indonesia is large.
Jokowi's major challenge will be to navigate through the difficult global environment over the next two years and implement the infrastructure investment that will unleash Indonesia’s full economic potential from 2016 onwards.

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today qnb group indonesias economy continues to slow Arab Today, arab today qnb group indonesias economy continues to slow

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today qnb group indonesias economy continues to slow Arab Today, arab today qnb group indonesias economy continues to slow

 



Arab Today, arab today
Arab Today, arab today Youssra depended on colored foam

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today unveils Joon - the 'millenials' airline

GMT 13:36 2017 Saturday ,23 September

unveils Joon - the 'millenials' airline
Arab Today, arab today Etiquette expert underlines importance of gifts

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts
Arab Today, arab today Iran tests new medium-range missile

GMT 21:24 2017 Saturday ,23 September

Iran tests new medium-range missile
Arab Today, arab today Saudi Arabia to unblock internet calling apps

GMT 11:31 2017 Wednesday ,20 September

Saudi Arabia to unblock internet calling apps
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Ministry seeks to improve education

GMT 14:49 2017 Sunday ,17 September

Ministry seeks to improve education
Arab Today, arab today All eyes on May as she prepares

GMT 10:16 2017 Friday ,22 September

All eyes on May as she prepares
Arab Today, arab today Psychologists help Mexico deal

GMT 05:05 2017 Sunday ,24 September

Psychologists help Mexico deal
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today Carmakers face billions in European

GMT 12:37 2017 Saturday ,23 September

Carmakers face billions in European
Arab Today, arab today Mercedes pumps 1 bln euros    

GMT 06:04 2017 Friday ,22 September

Mercedes pumps 1 bln euros    
Arab Today, arab today Lebleba is preoccupied in filming 'Back Street'

GMT 08:56 2017 Thursday ,21 September

Lebleba is preoccupied in filming 'Back Street'
Arab Today, arab today Big Western brands polluting oceans

GMT 20:10 2017 Saturday ,23 September

Big Western brands polluting oceans

GMT 08:59 2017 Wednesday ,20 September

Youssra prepares for launching her program

GMT 18:09 2017 Thursday ,21 September

China lifts 10-year travel ban

GMT 16:53 2017 Saturday ,02 September

Mai importance of gifts during Eid Al-Adha

GMT 12:01 2017 Wednesday ,20 September

Puerto Rico, Virgin Islands brace

GMT 10:46 2017 Saturday ,05 August

Nanis reveals simple ideas for home renovation

GMT 08:39 2017 Friday ,22 September

New Hurdles as Republicans Rush

GMT 06:49 2017 Friday ,22 September

O'Leary: Could ground more planes

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 12:46 2017 Thursday ,21 September

Google likely to buy stake in Taiwan smartphone maker HTC

GMT 11:37 2017 Saturday ,12 August

Fashion designer reveals her new collection
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday