Indonesian economic outlook in the midst of global challenges Muhammad Chatib Basri Harvard Kennedy School and CReco Research
Short term problems: macroeconomic stability
2
The macroeconomic impact of the global volatility
Risk of capital outflow
Improve trade balance or
Exchange rate depreciation
Slow down of China
Deteriorate trade balance
Imported inflation
The Fed interest rate hike
Problem in Euro and China (financial)
Risk of assets re pricing
Bank Indonesia: interest rate ↑ Govt tighten fiscal Bank Indonesia: lower interest rate Govt: Expand fiscal
Wealth effect
Slow down growth
Declining commodity price
Declining oil price
Government Revenue
Solution: FDI (export oriented) ↑ → BoP +
3
4
GDP Growth (Countries, annual, 2015 data is q1 data, percent, last data in the bracket) 15 China (7.0) India (7.51) 10
5
Indonesia (4.71) Brazil (-1.56)
0 2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
South Africa (1.3)
-5 Rusia (-2.2)
-10 Source: CEIC, World Bank
Greece (0.35)
2015
GDP Growth (ASEAN countries, annual, 2015 data is q1 data, percent, last data in the bracket) 9 Vietnam (6.13)
Philippines (5.16)
7 Indonesia (4.71) 5 Malaysia (5.65) 3
Thailand (3.04)
1
-1
2005
2006
-3 Source: CEIC, World Bank
2007
2008
2009
2010
2011
2012
2013
2014
2015
GDP Growth GDP Growth 5,2
6
5,1
7
8
5
4
4,9 2 4,8 0 Mar, 2014 Apr, 2014 Mei, 2014 Jun, 2014 Jul, 2014 Agu, 2014 Sep, 2014 Okt, 2014 Nov, 2014 Des, 2014 Jan, 2015 Feb, 2015 Mar, 2015
4,7
-2 4,6 -4
4,5
-6
4,4 Private Cons
Govt Exp
Inv
Export
Import
GDP
Gross Domestic Bruto (GDP)
1
2 728.8
2 866.9
2 157.8
2 239.3
GDP Growth
Selisih GDP Industrial Origin dan GDP Pengeluaran
Table 5 Growth Rate of GDP By Expenditure Base Year 2010 (percent) Component (1)
(2)
(3)
(4)
(5)
(6)
(7)
1. Pengeluaran Konsumsi Rumah Tangga
0.11
1.11
5.01
4.97
4.99
2.66
2. Pengeluaran Konsumsi LNPRT
-1.19
2.39
-8.25
-7.91
-8.08
-0.10
-48.43
32.17
2.71
2.28
2.47
0.18
-4.77
3.04
4.29
3.55
3.92
1.14
-
-
-
-
-
-
-6.28
1.56
-0.85
-0.13
-0.49
-0.03
-10.04
1.06
-2.27
-6.85
-4.62
-1.63
-0.17
3.78
4.72
4.67
4.70
4.67
3. Pengeluaran Konsumsi Pemerintah 4. Pembentukan Modal Tetap Domestik Bruto 5. Perubahan Inventori 6. Ekspor Barang dan Jasa 7. Dikurangi Impor Barang dan Jasa Gross Domestic Bruto (GDP)
Qtr. II-2015 Over Qtr. I-2015
Qtr. I-2015 Over Qtr. I-2014
Qtr. II-2015 Over Qtr. II-2014
Semester I-2015 Over Semester I-2014
Source of Growth Pertumbuhan Qtr. II-2015 (y-on-y)
Qtr. I-2015 Over Qtr. IV-2014
8
Table 2 Growth Rate of GDP By Industrial Origin Base Year 2010 (percent) Qtr. II-2015 Over Qtr. I-2015
Qtr. I-2015 Over Qtr. I-2014
Qtr. II-2015 Over Qtr. II-2014
Semester I-2015 Over Semester I-2014
Source of Growth Pertumbuhan Qtr. II-2015 (y-on-y)
Industrial Origin
Qtr. I-2015 Over Qtr. IV-2014
(1)
(2)
(3)
(4)
(5)
(6)
(7)
A.
Pertanian, Kehutanan, dan Perikanan
14.85
10.09
4.00
6.64
5.37
0.91
B.
Pertambangan dan Penggalian
-8.18
-2.57
-1.23
-5.87
-3.58
-0.54
C.
Industri Pengolahan
-0.53
3.86
3.97
4.42
4.20
0.96
D.
Pengadaan Listrik dan Gas
-7.17
4.43
1.73
0.76
1.23
0.01
E.
Pengadaan Air, Pengelolaan Sampah, Limbah dan Daur Ulang
0.27
0.19
2.27
2.15
2.21
0.00
F.
Konstruksi
-5.95
3.14
6.03
5.35
5.68
0.51
G.
Perdagangan Besar dan Eceran; Reparasi Mobil dan Sepeda Motor
-0.41
3.94
3.96
1.69
2.79
0.24
H.
Transportasi dan Pergudangan
-1.25
3.62
6.26
6.59
6.43
0.25
I.
Penyediaan Akomodasi dan Makan Minum
0.20
1.74
3.56
3.87
3.72
0.12
J.
Informasi dan Komunikasi
2.61
2.08
10.06
9.56
9.81
0.43
K.
Jasa Keuangan dan Asuransi
0.71
-1.21
7.57
2.46
4.97
0.09
L.
Real Estat
1.17
1.08
5.26
5.03
5.14
0.15
M,N.
Jasa Perusahaan
2.24
1.78
7.36
7.64
7.50
0.12
O.
Administrasi Pemerintahan, Pertahanan dan -6.43
0.48
4.71
6.46
5.58
0.21
-10.89
6.31
5.92
12.16
9.05
0.36
-6.39
3.30
7.34
8.16
7.76
0.08
R,S,T,U. Jasa Lainnya
1.84
1.99
8.00
8.07
8.04
0.13
Nilai Tambah Bruto Atas Harga Dasar
-0.43
3.50
4.44
4.13
4.28
4.03
Pajak Dikurang Subsidi Atas Produk
10.31
13.96
16.25
26.70
21.59
0.64
Gross Domestic Bruto (GDP)
-0.17
3.78
4.72
4.67
4.70
4.67
Jaminan Sosial Wajib P.
Jasa Pendidikan
Q.
Jasa Kesehatan dan Kegiatan Sosial
9
10
11
Inflation
Headline
Core
Administered
Volatile
(yoy growth, percent) 20 18 16
14 12 10 8
6 4 2 0
6
8
10 12
2010
Source: CEIC
2
4
6 2011
8
10 12
2
4
6 2012
8
10 12
2
4
6 2013
8
10 12
2
4
6 2014
8
10 12
2
4 2015
6
8
CPI by Expenditure (percent) Group Spending Headline
CPI CPI MOM MOM YOY YOY YOY Jul 2015 Aug 2015 Jul 2015 Aug 2015 Aug 2014 Jul 2015 Aug 2015
Contr
121.26
121.73
0.93
0.39
3.84
7.26
7.18
7.18
130.57
131.38
1.95
0.62
1.07
8.25
8.60
1.45
Food, beverages, cigarettes and tobacco
122.59
123.27
0.51
0.55
6.30
7.83
7.91
1.27
3 Housing, water, electricity, and fuel
119.38
119.65
0.18
0.23
5.97
7.94
7.30
1.19
4 Clothing
109.16
109.20
0.41
0.03
4.40
3.34
3.12
0.50
5 Health
115.71
116.49
0.53
0.67
4.96
6.25
6.58
0.97
6 Education, recreation and sport
110.27
111.63
0.30
1.23
3.80
3.82
4.24
0.48
116.87
116.78
0.73
-0.07
1.66
7.99
7.92
1.31
1 Foodstuff 2
7
Transportation, communication and finance
-10
Source: CEIC
Total Credit Working Capital Investment Consumption
Apr-15
Jan-15
Okt-14
Jul-14
Apr-14
Jan-14
Okt-13
Jul-13
Apr-13
Jan-13
Okt-12
Jul-12
Apr-12
Jan-12
Okt-11
Jul-11
Apr-11
Jan-11
Okt-10
Jul-10
Apr-10
Jan-10
Okt-09
Jul-09
Apr-09
Jan-09
Okt-08
Jul-08
Apr-08
Jan-08
Credit Growth
(yoy growth, percent) 50
40
30
20
10
0
Tax Revenue realization as of July 31st, 2015 No
Type of Tax
Non Oil and Gas Income Tax A (PPh) B VAT and Luxuries . taxes
2014 Realization
458,692.28
Revised 2105 State Budget
629,835.35
Target Δ% (20142015) 2014 as of July 2015 as of 31 July 31
37.31 258.486,23 293.521,34
Δ% (20142015)
13.55
408.995,74
576.469,17
40,95
216,137.27 202.701,81 (6,22)
C Land taxes
23.475,71
26.689,88
13,69
1,049.73
D Oil and gas taxes
87.446,35
49.534,79
(43,35) 51,876.00
E Total A+B+C+D
897.456,86
1.244.723,88 38,69
479,001.27 499.738,89 4,33
F
984.903,21
1.294.258,67 31,41
530,877.27 531.114,43 0,04
Total A+B+C+D+E
558,07
(46,84)
31.375,54
(39,52)
Source: Index Mundi
30.000
20.000
10.000
0
Jun-15
Jun-14
Jun-13
Jun-12
Jun-11
Feb-15
Mar-14
Apr-13
Mei-12
Jun-11
Jul-10
40.000
Jun-10
50.000
Agu-09
200
Jun-09
60.000
Sep-08
250
Jun-08
Nickle (US Dollars per Metric Ton)
Okt-07
Coal (US Dollars per Metric Ton)
Jun-07
160 140 120 100 80 60 40 20 0 Nov-06
1400 1200 1000 800 600 400 200 0
Jun-06
Crude Oil (US Dollars per Barrel)
Des-05
Jan-05
Feb-04
Mar-03
Apr-02
Mei-01
Jun-00
Feb-15
Mar-14
Apr-13
Mei-12
Jun-11
Jul-10
Agu-09
Sep-08
Okt-07
Nov-06
Des-05
Jan-05
Feb-04
Mar-03
Apr-02
Mei-01
Jun-00
Palm Oil (US Dollars per Metric Ton)
Jun-05
Jun-04
0
Jun-03
50
Jun-02
100
Jun-01
150
Jun-00
Feb-15
Mar-14
Apr-13
Mei-12
Jun-11
Jul-10
Agu-09
Sep-08
Okt-07
Nov-06
Des-05
Jan-05
Feb-04
Mar-03
Apr-02
Mei-01
Jun-00
Commodity Price
Mei-15
Mar-15
Jan-15
1
Nov-14
Sep-14
Jul-14
Mei-14
7
Mar-14
Jan-14
Nov-13
0
Sep-13
Jul-13
Mei-13
Mar-13
Jan-13
Nov-12
3
Sep-12
Jul-12
Mei-12
Mar-12
Jan-12
Policy Rates
(Percent)
9 1,2
India (LHS)
8
Indonesia (LHS)
1,0
6 0,8
5 Germany (RHS)
0,6
4
China (LHS)
0,4
2
Japan (RHS)
0,2
US (RHS)
0,0
Real Interest Rate (Monthly, Gov.Bond 10y, %) 5
Indonesia
4 3
China
2 1
US Germany
0 -1 -2 -3
India Japan
-4 -5
Source: CEIC
Source: CEIC
Data as of Aug 28, 2015
Exchange Rates (Commodity countries, Des 2013=100) 220 200 180 Russia
160 140
Brazil
120
Australia South Africa
100
Indonesia
80
Source: CEIC
Short and long term challenges Short term: Potential growth is limited --> stabilization over growth Mediumlong term: focus on supply constraint
22
Medium term and long-term issues: how to improve productivity
23
In technology: no self discovery
Source: Authors’ calculation using UN-Comtrade data based on SITC classification
Source: Basri and Rahardja ( 2011)
24
Capability to undertake complex task is still behind other middle income countries Not yet able to manage complex tasks?
If products could not be made in Indonesia, where else can they be made? From observed trade data, Indonesia made progress in improving capability to export products requiring more complex task (but so does Vietnam) Why matters? It reflects institutional capacity and ability to accumulate and channel knowledge into productive activities
Economic Complexity Index
25 Source: Atlas of Economic Complexity (Hausmann and Hidalgo et.al)
Development challenges are beyond macro-stability Brazil
China
India
Indonesia
Malaysia
Philippines
Thailand
Vietnam
Characteristics (2013) Population (person mn)
200.4
1,357.4
1,252.1
249.9
29.7
98.4
67.0
89.7
GDP Per Capita (in PPP, USD)
5,823
3,583
1,165
1,810
6,998
1,581
3,438
1,029
24.0
144.6
421.1
137.9
90.4
330.0
131.2
289.3
68.3
31.4
-0.3
6.4
2.5
39.2
25.0
50.9
Math
391
613
351*
375
421
427
511
Science
406
580
348*
382
420
438
528
10.08
13.36
1.16
1.3
8.22
9.12
7.36
5.62
2.94
3.53
3.08
3.08
3.59
3.00
3.43
3.15
82
76
67
70
97
71
83
76
-0.08
-0.03
-0.19
-0.24
1.10
0.06
0.21
-0.30
Density (person/sq km) Real Exchange Rate Movement (%) 2003-2013 (average
PISA Test Score (2012)
Broadband Penetration Fixed (wired)-broadband subscriptions per 100 inhabitants (2013) Logistics Performance Index (2014) Percentage of shipment met quality Government score Pradesh * Tamileffectiveness Nadu dan Himachal
Sources: World Bank, ITU, BIIS and others
26
Policy anticipation Short term
Medium term
• Increase aggregate demand: • cash transfer, • cash for work, • tax incentive for companies to keep their workers
• Infrastructure • Human capital: Attract FDI for technology spill over • Tax incentive for R&D, training, export oriented sector
27
