Resource information
The Indonesia Economic Quarterly (IEQ)
has two main aims. First, it reports on the key developments
over the past three months in Indonesia’s economy, and
places these in a longerterm and global context. Based on
these developments, and on policy changes over the period,
the IEQ regularly updates the outlook for Indonesia’s
economy and social welfare. Second, the IEQ provides a more
in-depth examination of selected economic and policy issues,
and analysis of Indonesia’s medium-term development
challenges. It is intended for a wide audience, including
policymakers, business leaders, financial market
participants, and the community of analysts and
professionals engaged in Indonesia’s evolving economy. This
paper discusses about the economic conditions of Indonesia
for the year 2015. Emerging market assets rebounded in
October 2015 after the sharp losses recorded in August and
September, when the uncertainty about the Chinese economic
slowdown and the U.S. interest rate outlook was particularly
high. Despite a more favorable market sentiment, capital
flows to emerging economies have remained weak and borrowing
costs relatively high. In addition to tight financing
conditions, Indonesia faced subdued external demand for its
exports in the near term and persistently low commodity
prices over the medium run. In 2015, fire in Indonesia cost
nearly twice that of reconstruction following the 2004
tsunami in Aceh. Agriculture and forestry have sustained
losses and damages in trillions. Sustained exposure to haze
could also lead to the volcano effect, i.e., a decrease in
plant productivity in the short term due to limited sun
exposure and a deleterious effect on plant physiology and
photosynthesis. The recurring nature of Indonesia’s fire
crisis is of particular concern. Another potential step in
Indonesia’s new reform process was the country’s signaling
its intention to join the Trans-Pacific Partnership (TPP)
agreement in the near future. Whether membership
materializes or not, the agreement is likely to have a
limited impact on trade, because import tariffs in member
countries are already low and Indonesia has trade agreements
with most of them.
