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flag Indonesia Indonesia: Economic and Political Outline

Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

Economic Indicators

The Indonesian economy has emerged from the global financial crisis relatively unscathed. It proved to be more resistant than the neighboring economies due to the low share of exports in the economy as a whole and the importance of private consumption since the country has a large domestic market. A stimulus package is tax cuts, increases in subsidies and additional expenditure commitments, was also used to cushion the effects of the crisis.The country adopted a stimulus plan which lowered taxes, increased subsidies and commitments for supplemental expenditures, which have allowed to soften the effects of the crisis. The growth has accelerated in 2011, estimated at 6.4% of the GDP, under the effects of the revival of investments and the continuous growth of private consumption. Due to its political stability, low public debt and dynamic domestic consumption, the rating agency Fitch raised the sovereign debt of Indonesia to the level of "investment grade" in December 2011.

However, the outlook for 2012 seem less favorable. The crisis of the sovereign debt of the eurozone countries, the decline in demand and commodity prices, inflation threatening food products, the volatility of financial markets and the shortage of bank credit are all risk factors of Indonesian growth. The Central Bank of Indonesia was also forced to revise its growth forecast for 2012: 6.3% instead of 6.7%.

Despite the good results from the main economic indicators, structural reforms are required.  Priority is given to promoting growth and investment in order to support job creation, as well as monetary stabilization. The government is also planning to modify its policy of subsidies for oil products. A new law on land acquisition has been adopted, aiming to boost investment in infrastructure. Despite the many scandals having undermined its credibility, the government has re-confirmed its commitment to fight against corruption, which is undermining the business climate.  In addition, the protection of the environment is a major challenge in Indonesia.

Although it has been decreasing since 2008, the unemployment rate remains high and many workers are in a precarious condition.  A large part of the population lives below the poverty line and the gap between the very rich and the very poor does not seem to be diminishing.

 
Main Indicators 2009201020112012 (e)2013 (e)
GDP (billions USD) 538.46706.75834.34936.491,031.92
GDP (Constant Prices, Annual % Change) 4.66.16.46.36.7
GDP per Capita (USD) 2,3272,9743,469e3,8484,190
General Government Balance (in % of GDP) -1.7-1.2e-1.7e-1.3-1.2
General Government Gross Debt (in % of GDP) 28.627.4e25.2e24.022.7
Inflation Rate (%) 4.85.1e5.7e6.55.4
Unemployment Rate (% of the Labor Force) 7.97.16.86.66.3
Current Account (billions USD) 13.585.64e1.54e-4.02-6.63
Current Account (in % of GDP) 2.50.80.2-0.6-

Source: IMF - World Economic Outlook Database ; World Bank , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

The agricultural sector contributes to nearly 16% of the country’s GDP and employs nearly 40% of the active population. Indonesia is one of the largest rubber producers in the world. Other major crops are rice, sugar cane, coffee, tea, tobacco, palm oil, coconuts and spices. Indonesia is the only Asian country to be an member of the OPEC to which it assures 5% of its production. However, it is still a net importer of oil. The country has great exploitable timber lands and mainly exports timber. 

Industries contribute to around half of the GDP. The industrial sector includes manufacturing of textiles, cement, chemical fertilizers, electronic products, rubber tires, clothing and shoes (most of these are for the American market). Wood processing is also a major activity.

The tertiary sector (financial institutions, transportation and communications) contributes to around a third of the GDP. The banking sector is well-developed. The Islamic bank  Syariah  has expanded rapidly during these recent years. Tourism is a major source of revenue, however, the sector has suffered from terrorist threats and natural catastrophes.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 39.7 18.8 41.5
Value Added (in % of GDP) 15.9 48.8 35.3
Value Added (Annual % Change) 2.9 4.7 9.4

Source: World Bank - Last Available Data.

 
 
Monetary Indicators 20062007200820092010
Indonesian Rupiah (IDR) - Average Annual Exchange Rate For 1 USD 9,159.329,141.009,698.9610,389.949,090.43

Source: World Bank - Last Available Data.

 
 
Learn more about Market Analysis about Indonesia on Globaltrade.net, the Directory for International Trade Services.
 

Indicator of Economic Freedom

Score:
56.0/100
Position:
Mostly unfree
World Rank:
112/179
Regional Rank:
21/38

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

 

Country Risk

See the Country Risk Analysis Provided By Ducroire.

 

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Foreign Trade in Figures

Indonesia is a member of the WTO and ASEAN (Association of South-East Asian nations).  Indonesia is open to foreign trade, which represented on average almost 50% of the GDP in 2008-2010. 

The country shows a positive trade balance, however it has diminished in 2009 under the effect of the global recession and the fall of the price in raw materials; however, it still remained on a surplus due to a small contraction of exports in relation to imports.  After beginning to grow again in 2010, exports rose strongly in 2011, supported by the increase in commodity prices and by the demand from developing countries. Likewise, the strong domestic demand has lead to a rise in imports. Due to lower global demand, a decrease in export is expected in 2012.

The three main export partners of Indonesia are Japan, the United States and Southeast Asia.  The commodities that are mainly exported are mineral fuels and hydrocarbons, electrical equipment, animal and vegetable fats & oils, nuclear reactors & boilers, and rubber.  Its main import partners are Southeast Asia, Japan and China.  The commodities that are mainly imported are mineral fuels & oils, nuclear reactors & boilers, iron & steel, electric & electronic equipment, and organic chemicals.

 
Foreign Trade Indicators 20062007200820092010
Imports of Goods (million USD) 80,34692,777126,95089,964131,690
Exports of Goods (million USD) 103,527118,013139,606119,646158,200
Imports of Services (million USD) 21,17524,07527,99427,62532,624
Exports of Services (million USD) 11,09312,07414,73113,23816,548
Imports of Goods and Services (Annual % Change) 8.69.110.0-15.017.3
Exports of Goods and Services (Annual % Change) 9.48.59.5-9.714.9
Imports of Goods and Services (in % of GDP) 25.625.428.821.423.0
Exports of Goods and Services (in % of GDP) 31.029.429.824.224.6
Trade Balance (million USD) 29,66032,75422,91530,93230,628
Trade Balance (Including Service) (million USD) 19,78620,9139,91721,19121,308
Foreign Trade (in % of GDP) 56.754.858.645.547.6

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2010
Japan 16.3%
China 9.9%
United States 9.1%
Singapore 8.7%
South Korea 8.0%
See More Countries 48.0%
Main Suppliers
(% of Imports)
2010
China 15.1%
Singapore 14.9%
Japan 12.5%
United States 6.9%
Malaysia 6.4%
See More Countries 44.2%

Source: Comtrade, Last Available Data

 

Main Products

Main Exports
(% of Exports)
2010
Coal, briquettes, ovoids etc, made from coalCoal, briquettes, ovoids etc, made from coal 11.5%
Petroleum gases and other gaseous hydrocarbonsPetroleum gases and other gaseous hydrocarbons 8.7%
Palm oil and its fractions, not chemically...Palm oil and its fractions, not chemically modified 8.5%
Petroleum oils, oils from bituminous minerals,...Petroleum oils, oils from bituminous minerals, crude 6.6%
Natural rubber and gums, in primary form, plates,...Natural rubber and gums, in primary form, plates, etc 4.6%
See More Products 60.0%
Main Imports
(% of Imports)
2010
Oils petroleum, bituminous, distillates, except...Oils petroleum, bituminous, distillates, except crude 13.0%
Petroleum oils, oils from bituminous minerals,...Petroleum oils, oils from bituminous minerals, crude 6.3%
Aircraft, spacecraft, satellitesAircraft, spacecraft, satellites 2.3%
Motor vehicles for the transport of goodsMotor vehicles for the transport of goods 1.8%
Radio and tv transmitters, television camerasRadio and tv transmitters, television cameras 1.8%
See More Products 74.7%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 

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Sources of General Economic Information

Ministries
Ministry of Finance
Ministry of Industry
Ministry of Commerce
Statistical Office
Statistical Office
Central Bank
Central Bank of Indonesia
Stock Exchange

Jakarta Stock Exchange


Search Engines
Indo
Google
Economic Portals
Economic, commercial and sectoral information about Indonesia and Asia in general

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Political Outline

Executive Power
The President is both the head of the State and the head of the government. The President enjoys the executive powers and appoints the cabinet. Both the President and the Vice-President are elected through direct universal suffrage for five-year terms. The President is the commander-in-chief of the armed forces and responsible for domestic governance and policy-making and foreign affairs.
Legislative Power
The legislature in Indonesia is bicameral. The parliament called People's Consultative Assembly (MPR) consists of: DPR (House of People’s Representatives – lower house) having 550 seats with its members elected directly to serve five-year terms, and DPD (House of Regional Representatives- upper house) having 128 seats with each province electing 4 members on a non-party basis. The President cannot dissolve the parliament but the President has the power to veto bills, and in turn a supermajority of legislators may act to override the veto.The people of Indonesia have limited political rights.
Main Political Parties
Indonesia has a multi-party system where a single party does not often have a chance of gaining power alone. Thus parties need to work together to form coalition governments. The major political parties in Indonesia are:
- PD (Democratic Party) - advocates ‘Pancasila’ – the 5 principles the Constitution is based on;
- Golkar (Functional Groups Party) – initially an alliance of NGOs opposing communism, now advocates democratic and liberal values;
- PBB (Crescent Moon and Star Party) – a moderate Islamist party;
- PDI-P (Indonesian Party for the Democratic Fight) – based on ‘Pancasila’ ideology, a split-away group from the PD led by ex-President Megawati Sukarnoputri.
Current Political Leaders
President: Susilo Bambang YUDHOYONO (since October 2004) - PD
Vice-President: Muhammad Yusuf KALLA (since October 2004) - Golkar
Next Election Dates
Presidential: July 2014
 

Indicator of Freedom of the Press

World Rank:
117/178
Evolution:
16 places down compared to 2009

Source: Worldwide Press Freedom Index 2010, Reporters Without Borders

 

Indicator of Political Freedom

Ranking:
Free
Political Freedom:
2/7
Civil Liberties:
3/7

Map of freedom 2010
Source: Freedom House

 

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Last Updates: January 2012