2017年-世界发展银行全球_Indonesia_Economic_Quarterly_October_2017___Closing_the_Gap_79页_4mb

Summary of Indonesia Economic Quarterly: Closing the Gap (October 2017)

Core Content

The Indonesia Economic Quarterly (IEQ), published by the World Bank, provides a comprehensive overview of Indonesia's economic and fiscal developments over the past three months, as well as an in-depth analysis of key policy issues. This edition focuses on closing the infrastructure gap through increased private sector participation.

Main Economic Developments

• GDP Growth: Indonesia's real GDP growth remained steady at 5.0% year-on-year (YoY) in Q2 2017, unchanged from Q1. The growth rate has been around 5% since Q1 2014, lower than the beginning of the decade.
• Global Context: A generally favorable global economic environment was observed, with improved global growth, increased trade, and accommodative monetary conditions in advanced economies.
• Investment Growth: Investment growth rose to its highest level since Q4 2015, driven by construction and infrastructure investment. This reflects improved public investment and lower lending rates.
• Private Consumption: Private consumption growth remained stable, despite favorable conditions such as job creation, wage increases, and a stable Rupiah. However, it did not accelerate as expected.
• Inflation: Headline inflation accelerated in Q2 due to electricity tariff hikes, but food and transport inflation eased. Core inflation remained subdued, supported by low food price inflation.
• Exchange Rate: The Rupiah remained stable amid appreciating emerging market (EM) currencies, but real effective exchange rate (REER) showed depreciation pressure.
• Fiscal Management: The 2017 Revised Budget increased the fiscal deficit to 2.9% of GDP from 2.4%, but remained within the legal limit of 3.0%. Revenue collection improved, preventing disruptive cuts at the end of the fiscal year.
• Labor Market: Employment growth outpaced labor force and working-age population growth, driven by wage employment and non-agricultural self-employment. However, the shift from agriculture to services slowed.
• Poverty and Inequality: Poverty reduction slowed since 2011, with over 20% of Indonesians vulnerable to falling into poverty. Inequality, as measured by the Gini coefficient, continued to fall YoY for four consecutive years, but earnings inequality began to rise again.

Outlook for 2018

• GDP Growth: Expected to rise to 5.1% in 2017 and 5.3% in 2018, driven by continued reforms and improved domestic demand.
• Inflation: Projected to remain around 3.5% YoY in 2018, with continued low food price inflation acting as a drag.
• Current Account Deficit: Forecast to widen from 1.7% to 1.8% of GDP in 2018 due to declining coal prices and weak export performance.
• Fiscal Policy: The 2018 budget reaffirms the government's commitment to fiscal discipline, with a projected deficit of 2.2% of GDP. Revenue forecasts are conservative, and expenditure restraint, particularly in material spending, is expected to reduce the deficit.

Focus Topic: Mobilizing the Private Sector for Infrastructure Development

• Infrastructure Deficit: Indonesia faces a significant infrastructure deficit due to years of underinvestment, with per capita public capital stock only a third of other emerging markets and advanced economies.
• Private Sector Involvement: To close the infrastructure gap, increased private sector participation is essential. The government has targeted over USD 400 billion in infrastructure investments from 2015 to 2019.
• Constraints to Private Investment: Several constraints hinder private sector involvement, including a complex legal and regulatory environment, inefficient project planning and appraisal, and lack of transparency in state-owned enterprises (SOEs).
• Government Efforts: The government has introduced various financing instruments to support public-private partnerships (PPPs), such as the Indonesia Infrastructure Guarantee Fund (IIGF) and the National Strategic Project (PSN).
• Challenges in PPPs: Some PPP projects have faced difficulties due to legal and regulatory constraints. Assessing the "value for money" of these projects is crucial, and a checklist for identifying the most relevant delivery mode is provided.

Key Risks to the Outlook

• External Headwinds: Risks include a potential pickup in global uncertainty, if the Fed deviates from its gradual monetary tightening, further weakening of commodity prices, and the implementation of protectionist measures by advanced economies.
• Loss of Reform Momentum: The government's commitment to structural reforms is critical, as gaps in physical and human capital and institutional quality remain significant. Delays in reforms may slow potential growth and affect the outlook.

Supporting Information

• The report includes a list of acronyms, tables, figures, and boxes that provide detailed data and analysis on economic indicators, fiscal policy, and infrastructure development.
• The appendix offers a snapshot of Indonesian economic indicators, including GDP growth, inflation, and poverty rates, as well as a review of the 2018 budget and its implications for fiscal management.

Conclusion

The Indonesia Economic Quarterly emphasizes the need for sustained structural reforms and increased private sector participation to address the country's infrastructure deficit and boost long-term economic growth. While the current economic environment is favorable, the lack of acceleration in growth is a concern, particularly in private consumption. The government's fiscal management and commitment to discipline remain strong, but continued challenges in the external sector and reform momentum could impact future growth prospects.