世界发展银行-Indonesia-Economic-Quarterly,-June-2019-_-Oceans-of-Opportunity_75页_3mb

Summary of Indonesia Economic Quarterly (June 2019)

Core Content

The Indonesia Economic Quarterly (IEQ) provides an in-depth analysis of the country's economic and fiscal developments, placing them in a global context. It highlights key economic indicators, policy implications, and medium-term challenges, particularly in the context of Indonesia's blue economy—referring to the economic activities related to the ocean, including fisheries, tourism, and marine resources.

Main Points

Economic and Fiscal Overview

• Growth remained stable in 2018 at 5.2% yoy, supported by strong domestic demand and robust investment, especially in the first half of the year.
• GDP growth in Q1 2019 was 5.1% yoy, slightly lower than Q4 2018 and below expectations, reflecting a moderation in investment and inventory drawdowns.
• Private consumption was supported by strong non-profit institution spending (political parties) and civil servant bonuses, contributing positively to growth.
• Government consumption increased significantly due to higher social spending, material, and personnel expenditures.
• Net exports declined in 2018 due to weaker external conditions and increased capital goods imports, but the service sector remained a key driver of growth.

Inflation and Monetary Policy

• Headline inflation eased in Q1 2019 to 2.6%, the lowest since Q4 2009, driven by declining food price inflation.
• Bank Indonesia maintained the benchmark policy rate at 6% to stabilize capital flows, while also implementing accommodative measures to boost domestic demand.
• VAT collections contracted in early 2019, contributing to a slowdown in revenue growth, but the Rupiah appreciated against the USD and in real effective terms.

Fiscal Position

• Fiscal deficit was 1.8% of GDP in 2018, improving to 2.1% in 2019, reflecting a combination of lower revenues and higher expenditures.
• Revenues increased by 16.6% yoy in 2018 due to tax reforms and improved tax administration, while expenditures rose by 10.3% yoy, mainly due to social and material spending.
• Capital spending declined for the second consecutive year, likely due to policy uncertainty and slower investment.

External Sector

• Current account deficit (CAD) narrowed in Q1 2019 to USD 7.0 billion, from USD 9.2 billion in Q4 2018, driven by a sharper decline in imports than exports.
• Capital flows improved since mid-2018, with portfolio inflows continuing into Q1 2019, but trade tensions led to net outflows in May.
• Exchange rate stabilized, with the Rupiah appreciating against the USD and in real effective terms.

Labor Market and Social Indicators

• Labor force participation rate (LFPR) reached a record high, and unemployment rate hit a record low in February 2019.
• Poverty and inequality continued to decline, with the Bottom and Middle 40% seeing increased consumption shares.
• However, vulnerability remains high, and the middle class is expanding.

Risks and Outlook

• Growth outlook for 2019 is 5.1% yoy, with a slight recovery expected in 2020 to 5.2%.
• Downside risks include re-escalating trade tensions, weaker global growth, and deteriorating commodity prices.
• External sector is expected to contribute modestly to growth due to weaker import and export activity.

Key Economic Sectors

Fisheries Sector

• Indonesia is the world's second-largest marine capture fish producer.
• The fisheries sector is vital for food security and employment.
• However, poor management, illegal fishing, and marine debris are threatening its long-term sustainability and economic value.

Tourism Sector

• Marine and coastal (MAC) tourism is a major driver of visitor growth, with Bali and Lombok accounting for about half of Indonesia's foreign visitors.
• Marine debris and reef damage are increasingly affecting tourist experiences and the attractiveness of MAC areas, such as Komodo National Park.
• Improving resource management and protecting marine environments are essential to sustain tourism growth.

Marine Plastic Debris

• Marine plastic debris is a significant risk to Indonesia's ocean sectors, including fisheries and tourism.
• Despite having one of the lowest per-capita waste generation rates among top marine debris producers, a high proportion of waste is mismanaged, contributing to Indonesia's status as the world's second-largest marine debris producer.
• Waste mismanagement varies significantly between cities, with some experiencing higher levels of marine pollution.

Conclusion

The report emphasizes the potential of Indonesia's ocean sectors to drive economic growth and development. It calls for reforms in fisheries and tourism management, better policies to combat marine debris, and cross-sector investments to ensure the sustainability of the Blue Economy. These efforts are crucial for enhancing resilience to natural disasters and climate change, and for leveraging marine assets to achieve greater economic prosperity.

Key Information

• Document Title: Indonesia Economic Quarterly (June 2019)
• Main Authors: Derek H. C. Chen (Lead Author), Ndiame Diop, Frederico Gil Sander
• Supporting Institutions: World Bank, Bank Indonesia, Ministry of Finance, Central Bureau of Statistics
• Funding: Australian government under the SEMEFPA program
• Data Cut-off: June 17, 2019
• Available for Download: worldbank.org/ieq

Figures and Tables

• Figure ES.1: Weaker fixed investment and inventory drawdowns dragged on growth in Q1.
• Figure ES.2: Private consumption was robust, supported by stronger spending by non-profit institutions (political parties).
• Figure ES.3: The nominal current account deficit narrowed in Q1, in line with the slowdown in investment.
• Figure ES.5: Easing food price inflation weighed on headline inflation in Q1 2019.
• Figure A.1: Weaker investment and inventory destocking dragged growth slightly.
• Table ES.1: Real GDP growth is projected to cool to 5.1% in 2019 and recover to 5.2% in 2020.