Download M. Chatib Basri Institute for Economic and Social Research Faculty

M. Chatib Basri
Institute for Economic and Social Research
Faculty of Economics University of Indonesia
Why we survived the global crisis? Good luck
and good policy
Export profiles
Table 1 Export Profiles: Indonesia vs. Other Emerging Asian Economies
Average growth in non-oil export
values (2004-2007, %)
Contributors to export growth
Manufactures (%)
Agriculture, forestry, fishery (%)
Mining & minerals (%)
Share of parts and components in intra
Asian trade (%)
Source: UN-Comtrade, authors calculation
Indonesia
China
Malaysia Philippines Thailand Vietnam
17.0
28.2
10.5
7.8
16.5
23.9
38.9
35.9
23.7
94.9
2.2
2.6
75.1
18.7
3.6
73.3
6.9
18.2
80.7
14.7
3.0
69.1
28.6
1.0
11.2
20.1
22.5
29.0
18.5
10.8
What made 2008 crisis different with 1998: good
policy response
1998
2008
 Monetary policy: tight,





very high interest rate
Fiscal Policy: Initially
tight, the expansionary
Banking system: weak,
unprudent
Policy response towards
banking sector: closed 16
banks
Focus on strutural reform
Exchange rate regime:
fixed
 Monetary policy: ease,





flushed liquidity, lowered
interest rate
Fiscal policy: expansionary
Banking system: relatively
healthy
Policy responses towards
banking problem: bailout, deposit insurance
Trade regime: relative
open
Exchange rate regime:
flexible
What made 2008 crisis different with 1998: good
policy response
1998
2008
 Monetary policy: tight,





very high interest rate
Fiscal Policy: Initially
tight, the expansionary
Banking system: weak,
unprudent
Policy response towards
banking sector: closed 16
banks
Focus on strutural reform
Exchange rate regime:
fixed
 Monetary policy: ease,





flushed liquidity, lowered
interest rate
Fiscal policy: expansionary
Banking system: relatively
healthy
Policy responses towards
banking problem: bailout, deposit insurance
Trade regime: relative
open
Exchange rate regime:
flexible
Should we say good bye to export
led growth strategy?
Comovements between Innovations in Private Consumption with Innovations of GDP
Components a
Components of GDP
Lags
0
Government
consumption
0.12
Gross fixed capital
formation
0.06
Exports
0.24
-1
-0.16
-0.04
-0.27
-2
-0.22
-0.01
-0.41
-3
0.26
-0.07
0.29
-4
0.20
-0.13
0.49
Source: Estimated from BPS National Account
a
Comovements between innovations of each component derived from original data that spans from 2000-I to
2008-IV. Here growth is expressed as annual (year-to-year) growth
Basri and Rahardja (forthcoming)
GDP by sectors
GDP by expenditure
Rupiah strongly appreciated
against USD
Rp/USD
Inflation: under control
Thanks to transportation
and food prices
Core inflaton
Economy is accelerating
Real VAT growth
Domestic VAT
Import VAT
Credit growth rebounded
Government Budget
Macroeconomic Forecast
Indicators
2009
2010
GDP growth (%)
4-4.5
5.5-6
Inflation (%)
2.78
6-7
SBI 3 months (%)
6.5
7-8
IDR/USD
10.200
9000-9500
Good problem: managing capital
inflow
 No sterilization  will hurt exports
 Sterilization  Cost? (Maybe not that high)
 Let capital inflow ? inflationary
 Tobin tax? (Negative impact on capital flow)
 Fiscal restraint? Too costly for the economy
Exports, Imports and Trade
Balance (including oil and gas)
China is important market for
us
REST OF EAST ASIA FINDS NICHES IN CHINA’S
IMPORT MARKETS
Potential
Potentials
 Resource rich country (but have to be careful with the
dutch disease issue)
 Large domestic market
 Demographic Bonus
Thank you