Indonesia Economic Quarterly, December 2011 : Enhancing Preparedness, Ensuring Resilience
International financial markets remain turbulent, dominated by the political and economic challenges of the Euro zone debt crisis and signs of weakening global growth. However, to date, although portfolio outflows have been seen, Indonesia's d...
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| Language: | English en_US |
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World Bank, Jakarta
2017
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| Online Access: | http://documents.worldbank.org/curated/en/820061468253869189/Indonesia-economic-quarterly-enhancing-preparedness-ensuring-resilience http://hdl.handle.net/10986/26667 |
| Summary: | International financial markets remain
turbulent, dominated by the political and economic
challenges of the Euro zone debt crisis and signs of
weakening global growth. However, to date, although
portfolio outflows have been seen, Indonesia's domestic
economy continues to perform strongly. The economy remains
relatively well-positioned to weather future external shocks
and steps have been taken to improve crisis preparedness,
for example, by increasing the flexibility of any fiscal
response. The Euro zone continues to grapple with the policy
responses to stem the crisis. The political and policy
responses to the Euro zone debt crisis have been evolving on
an almost daily basis, influencing global financial markets,
risk appetite and capital flows to emerging economies such
as Indonesia. Increased funding stress for European
financial institutions was followed by a coordinated
announcement of liquidity swap arrangements by central banks
including the Federal Reserve and European Central Bank. In
addition to putting in place policies to address the
near-term impacts of any future shocks, with a protracted
weakness in external demand likely, it is an opportune time
to move forward with investments and reforms which can
enhance domestic productivity and growth and attract more
stable and longer-term capital flows. Indeed, the 2012
budget again significantly boosts capital expenditure,
although ongoing budget execution challenges could hinder
the effectiveness of the increased allocation on
infrastructure improved infrastructure and investment
climate can help to promote further the positive recent
performance of Indonesia's manufacturing sector, after
its weakness in the decade following the Asian crisis. The
scope for productivity growth within manufacturing and other
sectors through technology adoption and adaption can also be
enhanced by further improvements in the quality of education
of the labor force and the institutional environment for
research and development. |
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