1
Ministry of Finance of The Republic of IndonesiaJune 2009
STATE OF THE GLOBAL ECONOMY STATE OF THE GLOBAL ECONOMY AND ITS EFFECT ON INDONESIAAND ITS EFFECT ON INDONESIA
1. Recent Global Economic Condition
2. Impact on Indonesia’s Economy
3. Indonesia’s Policy Response
4. Conclusion
OUTLINE
2
Recent Global Economic Condition
3
Global Economic: Good News dan Bad News
4
Moodys revised Indonesia credit rating outlook to positive
5
• World Economic Growth in 2009 revised down from 3,2% (2008) to -1,3% (2009)
• The decline on world trade flows from 2,5% (2008) to -11% (2009)
• Capital inflow to emerging market drop by USD 700 billion (2007-2009)
• Value of leading financial institutions contracted by the crises
6
The 2008/2009 Global Crisis
The projection of world economic growth and trade projection are getting lower, but optimistic rise in 2010
6.90
2.10
-2.80
-11.02
0.62
(15.0)
(10.0)
(5.0)
-
5.0
10.0
Jan-08 Nov-08 Jan-09 Apr-09 Proyeksi 2010
Trade growth projection is negative in 2009 and revised to be positive in 2010 supported by increasing of trade activities (Baltic Dry Index).
Jan -08 Oct -08 Jan -09 Apr-09 2010pWorld 4.4 3.0 0.5 -1.3 1.9
USA 1.8 0.1 -1.6 –2.8 0.0
Europe 1.9 0.2 -2.0 –4.2 –0.4
Japan 1.7 0.5 -2.6 –6.2 0.5
China 10.0 9.3 6.7 6.5 7.5
India 8.2 6.9 5.1 4.5 5.6
ASEAN-5 6.2 4.9 2.7 0.0 2.3
Indonesia 6.4 6.0 4.5 2.5 3.5
Economic Growth Projection 2009 & 2010
7
1646
6/2/09, 4106
11269
8596002
6809
46475538
11033
0
2000
4000
6000
8000
10000
12000
14000
1/2/07 4/2/07 7/2/07 10/2/07 1/2/08 4/2/08 7/2/08 10/2/08 1/2/09 4/2/09
Baltic Dry IndexBaltic Dry Index
World and Asia economic growth getting slowersince Q4 2008
World Economic Growth
US Europe China Japan Singapore Indonesia Malaysia Thailand Philippines
2008-Q1 2.5 2.2 10.6 1.3 6.7 6.2 7.4 6.0 3.9
2008-Q2 2.1 1.5 10.1 0.6 2.5 6.4 6.7 5.3 4.2
2008-Q3 0.7 0.6 9.0 -0.3 0.0 6.4 4.7 3.9 4.6
2008-Q4 -0.8 -1.4 6.8 -4.3 -4.2 5.2 0.1 -4.2 2.9
2009-Q1 -2.5 -4.6 6.1 -9.7 -10.1 4.4 -6.2 -7.1 0.4
8
GDP growth of Indonesia (%) is positive as well as China and India
9
Indonesia resilience to the global crises better than others
Indonesian contribution in export lower than others
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% PDB
Increasing in commodity price followed by the oil price
400450500550600650700750800850
25
45
65
85
105
125CPO WTI
10
US dollar depreciate, while Asian currency dan Rupiah appreciate.
3 Mar 2009 117.2
1 Dec 200874.5
27 Dec 2008 91.2
IDR 15 Jun 93.2
11
Indonesia CDS getting lower…
5 Jan 09 : 723
8 Jun 09 : 285
Thailand 8 Juni 105.3
Philippines
China
12
Mitigate the global economic crisis (G20)2009 – 2011 : USD 5T
• Bank Recapitalization : USD 1,1 Billion
• Toxic Asset Restructure : USD 1,4
billion
• Fiscal Stimulus(globally phase one): USD 1,4
billion
• Capital increase and IFIs : USD 1,1
billion
13
14
The World Financial Sector Recovery Program Through Toxic Asset and Banking Recapitalization (commitment : 2,5 trillion USD)
US 1,8 T China 19,2 M
Russia 32,6 M
South Korea 19,3 M
Eropa 349,3M
Australia 5,2 M
Brazil 3,8 M
Japan 147,6 M
Canada 59,6 M
Singapore dan Hong Kong 10 M
In $US
Amerika Serikat
-0.2
0.7
2.1
-0.50
0.5
11.5
22.5
33.5
06 07 08 Q408
%
Stimulus1,2% GDP
Deficit5,8% To GDP
Stimulus 5,5%Deficit 12,30%
Inggris
1.7
0.3
-1.8-3
-2
-1
0
1
2
3
4
06 07 08 Q408
%
Stimulus1,1% GDP
Deficit5,3% To GDPStimulus 1,0 %
Deficit 10%
China
6.8
9
10.1
02
46
810
1214
06 07 08 Q408
%
Stimulus0,6% GDP
Deficit0,2% To GDP
Stimulus 13,3%Deficit 3%
Jepang
0.7
-0.2
-4.6-5
-4
-3
-2
-1
0
1
2
3
4
06 07 08 Q408
%
Stimulus1,0% GDP
Deficit0,25% To GDPStimulus 3,1 %
Deficit 7,1%
Indonesia6.42
6.41
5.2
01
23
45
67
06 07 08 Q408
%
Stimulus1,4% GDP
Deficit1% To GDPStimulus 1,4 %
Deficit 2,5%
Malaysia
Singapura
6.3
4.7
2.7012345678
06 07 08 Q408
%
Stimulus4,4% GDP
Deficit3,1% To GDP
-3.7
-0.2
2.1
-6
-4
-2
0
2
4
6
8
10
12
06 07 08 Q408
%
Stimulus1,1% GDP
Deficit% To GDPStimulus 6,4%
Deficit 1,1 %
Stimulus 4,4%Deficit 3,1%
Filipina
4.55
4.4
0123456789
06 07 08 Q408
%
Stimulus% GDP
Deficit% To GDPStimulus 4,%
Deficit 2,2%
The Cost of Fiscal Stimulus Program in some countries: US$ 1.4 Billion
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Impact on Indonesia’s Economy
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9,500
10,000
10,500
11,000
11,500
12,000
12,500
Jan-09 Feb-09 Mar-09 Mar-09 Apr-09 May-09 Jun-09
1,200
1,350
1,500
1,650
1,800
1,950
2,100
Exchange Rate (LHS) Stock Index (RHS)
Macroeconomic of Indonesia is improving
Market Capitalization and JCI
-
500
1,000
1,500
2,000
2,500
3,000
Jan/0
8
Feb/0
8
Mar/
08
Apr/
08
May/0
8
Jun/0
8
Jul/0
8
Aug/0
8
Sep/0
8
Oct/08
Nov/0
8
Dec/0
8
Jan/0
9
Feb/0
9
Mar/
09
Apr/
09
May/0
9
Jun/0
9 500
1,000
1,500
2,000
2,500
3,000
Market CapIHSG
z
2090.9
1.0068
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Stock Net Foreign Buying 2009Stock Indices & Exchange Rates
Bond Net Foreign Buying 2009
(Rp billion)
As of Juni 23, 2009, Rupiah appreciate 5% dan JCI stronger 33% since 2008.
(1,160)
(562)
1,815
2,602
1,974
(2,000)
(1,000)
0
1,000
2,000
3,000
Jan Feb Mar Apr May
(1,580)
(5,120)
(1,070)
3,880
5,193
(6,000)
(4,000)
(2,000)
0
2,000
4,000
6,000
Jan Feb Mar Apr May
Source: Bloomberg, as of 23 June 2009.
YTD Performance as of 23 June 2009
33%
19%
16%
20%
13%
16%
39%
64%
19%
-2%
-2%
0%
-13%
0%
1%
3%
-5%
-1%
Indonesia
Thailand
Singapore
Philippines
Malaysia
Korea
India
China
Brazil
% change in stock index % change in currency
IHSG 3rd Best Performance below India dan China....
Capital outflow happened in Q3 & Q4 2008 and inverse in Q1 2009
Source : BI dan BPSSource : BI dan BPS
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May 200957,8
Foreign reserve has risen up to USD 57.87 billion
43,3
55.9 60.6
57.87
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Economic Growth projection Q1 2009 4,37% Much better than the WEO projection (April 2009) 2.5%
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2009Q1 Q2 Q3 Q4 Q1
Household Consumption 5,67 5,52 5,33 4,84 5,84
Government Consumption 3,62 5,26 14,06 16,35 19,35
Investment 13,73 12,01 12,15 9,14 3,51
Export 13,64 12,36 10,63 1,82 -19,13
Import 17,99 16,11 10,97 -3,53 -24,09
Growth 6,25 6,42 6,4 5,18 4,37
2008
Source: Indonesia National Statistic BureauSource: Indonesia National Statistic Bureau
Private consumption increase in Q1 2009..
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Agriculture sector keep stable, while Manufacturing and trade drop because of global crises.
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Global crises hit the non-tradables sector significantly..
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Investment is not fully recover
Investment Credit Working Capital Credit
Investment and Working capital Credit Growth
Capital Goods Import Growth (YoY) and Domestic Cement Sales
Capital Goods Import Domestic Cement Sales
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Export and import remain in a low level…
Export Import Profile Non Oil and GasExport Import Profile
Non Oil and GasExport Import GrowthInternational Commodity price index
Agriculture Manufacture Mining
Ytd
Gro
wth
Ytd
Gro
wth
US
D M
illi
on
Total Ekspor Impor
-60%
-40%
-20%
0%
20%
40%
60%
80%
0
2
4
6
8
10
12
14
8000
6000
USD MillionGrowth
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But export growth in some sectors reversingin March 2009
-60
-50
-40
-30
-20
-10
0
10
20
30C
oal
Pal
m O
il
Ele
ctro
nic
s
Mec
han
ical
Dev
ice
Ru
bb
er
Tex
tile
Pu
lp a
nd
Pap
er
Fu
rnitu
re
Fis
h a
nd
Sh
rim
p
Jan- Apr 09 Mar - Apr 09
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Export growth based on country destination in 2009
Even the export to Japan and Singapore still negative, it still supported by the export to US, South Korea, and China.
Even the export to Japan and Singapore still negative, it still supported by the export to US, South Korea, and China.
Jepang
Korea Selatan
China
Total Ekspor
Amerika Serikat
Singapura
-40,00
-30,00
-20,00
-10,00
0,00
10,00
20,00
30,00
40,00
50,00 Jan - Apr 09
Apr - Mar 2009
Singapore
USJapan
South Korea
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Indonesia’s Policy Response
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What we have done, 2009:
1. Monetary Policy and BOP
2. Financial Sector
3. Fiscal Policy
4. Export Promotion and Real Sector
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1. Monetary Policy and BOP1. Central Bank reduce policy rate and LPS rate and the
commercial banks to follow-up
2. Coopertaion in Currency Swap1. CMIM: ASEAN+3
2. BSA-Japan, BCSA-China
3. Upcoming Rp-Yen swaps
2. Financial Sector1. Handling Trouble Banks: Century Bank and Bank IFI
2. Non-bank Financial Sector Reform
3. Law on Financial System Safety Nets (JPSK)
Government measures to mitigate the crises
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3. Fiscal Policy: Implementation of fiscal stimulus 2009 and improve spending
•Contigency Loans 2009 and 2010•Front Load Bonds issuance and Samurai Bonds•Laws: VAT and Local Taxes•Prepate budget 2010 to continue stimulus, social spending, defense budget, bureaucratic reform, and expand infrastructure.
•Continue reform: MoF, tax, customs, budget, treasury, bonds market and financial sector
4. Export Promotion and Real Sector•Trade Financing: JBIC, Bilat, ADB and IFC•Tax incentives (Rate, Minimum Treshhold, Tax on Employee, ….. Energy costs)
•Extending KUR and other support for SME•Securing Financing for 10.000 MW and other major infrastructure projects
Government measures to mitigate the crises
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-450
-375
-325-300
-250 -250-225
-250
-189-175
-150-125
-87
-30
-500
-450
-400
-350
-300
-250
-200
-150
-100
-50
0
UK
AU
S
KO
R HK
BR
A
CA
N
THA
IDN
CH
N
US
A
MS
PH
I
SN
G
JPN
Indonesia’s fiscal stimulus to mitigate the global crisis impact in line with other Asian countries ...
Decreasing of BI RateDecreasing of BI Rate IndonesiaIndonesia,s,s fiscal stimulus budget fiscal stimulus budget amounted 1.4% GDPamounted 1.4% GDP
0
0.5
1
1.5
2
2.5
3
CHI IND JAP IDN NZ AUS KOR HK
Fiscal Stimulus Measures in the 2009 Budget(in percent of GDP)
The BI Rate decreased 225 bps sinceSep 2008
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JP
NJP
N
Conclusion …
•Despite the global recession, Indonesian economy expected to remain strong and solid.
•Macroeconomic management is improving capital inflow continued to support the stable rupiah, an effective stimulus fiscal will likely outlast the election session.
•The 2009 growth expected to achive 4 to 4,5% and accelerated in 2010, sipported by external factor & investment pick-up.
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THANK YOU
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