Resource information
The second quarter of 2013 was an
eventful one as Indonesia's economy, policy settings
and financial markets adjusted to pressures which have been
mounting over recent quarters and to shifts in the global
environment. Following slightly weaker-than-expected growth
in the first quarter, there are signs that domestic demand,
particularly investment, has continued to moderate. On the
fiscal front, the combination of lower revenues and higher
subsidy spending continued to pressure public finances. A
revised Budget, incorporating a long a waited increase in
subsidized fuel prices, along with a comprehensive
compensation package to reduce the impact of higher fuel
prices on the poor, was approved on June 17. Meanwhile,
international financial markets have reacted strongly to the
prospect of quantitative easing in the US winding down in
coming quarters, triggering a major sell-off in emerging
market assets, including Indonesia, prompting Bank Indonesia
(BI) to adjust interest rates higher.
