Stronger Investment and Export Growth Continue to Strengthen Indonesias Economy

Stocks and Financial Services Press Releases Friday December 15, 2017 08:26
JAKARTA--15 Dec--World Bank
More and better information can improve service delivery and local business environment

JAKARTA, December 14, 2017 — The Indonesian economy continued to expand at a solid pace during the third quarter of 2017 helped by commodity tailwinds and stronger domestic and external demand, according to the World Bank's December 2017 Indonesia Economic Quarterly.

Real GDP growth increased from 5.0 percent in the second quarter to 5.1 percent in the third quarter of 2017. Investment growth rose to its highest level in more than four years and foreign direct investment recorded the largest net inflow in more than seven years. Export and import volumes registered double-digit growth for the first time since 2012.

"In addition to external factors such as higher commodity prices and stronger global growth, the solid performance of the Indonesian economy was also supported by a better business environment that is attracting more foreign direct investment, as well as more public capital investments, which is the direct positive impact of fuel subsidies reduction two years ago," said Rodrigo A. Chaves, World Bank Country Director in Indonesia. "This reflects the importance for the Government to persevere in implementing further ambitious reforms such as increasing tax collections and continuing to rationalize subsidies to accelerate infrastructure and human capital development ."

There are also signs that private consumption has started to recover. Sales of consumer durables such as car and motorcycles rebounded, with the latter jumping double-digits in the third quarter after three years of consecutive contractions.

Real GDP growth is projected at 5.1 percent for 2017, accelerating to 5.3 percent in 2018 driven by continued strong investment growth, further recovery in consumption, and an increase in government spending.

Effective government spending is also crucial to economic development. More than half of total government spending across all levels of government in Indonesia is conducted by sub-national governments, with 38 percent managed by district governments and 15 percent by provinces. This substantial allocation of resources to local governments, a product of Indonesia's decentralization policy since the early 2000s, reflects the primary responsibilities of local governments to deliver basic services, notably health, education and local infrastructure.

Decentralization has increased opportunities for local solutions to local problems. Access to services has improved over the past 15 years of greater decentralization, but service delivery outcomes vary widely among local governments. The report, titled Decentralization that delivers, examines the wide-ranging performance of local governments and identifies mechanisms to help local governments perform better.

"Improving service delivery by local governments requires working on three i's: more incentives for better performance in spending the resources the central government transfers to districts; more information for citizens and the central government to better monitor local government performance, and more interaction between citizens and businesses and their local governments and service providers to demand better quality," said Frederico Gil Sander, Lead Economist for the World Bank in Indonesia.

The launch of the December 2017 Indonesia Economic Quarterly is part of Voyage to Indonesia, a series of events leading up to the 2018 IMF-World Bank Annual Meetings in Bali. The Australian Department of Foreign Affairs and Trade supports the publication of the report.


Latest Press Release

Bangkok Bank reserves cash of Baht 50 billion to meet demand during the Chinese New Year festival at more than 1,000 branches and ATMs nationwide

Bangkok Bank will be reserving more than Baht 50 billion of cash at its 1,000-plus branches, including micro branches, and its nationwide network of 10,000 ATMs in order to meet the higher demand during the Chinese New Year festival. The bank will also...

Yoma Strategic Holdings Ltd. Raises THB 2,220 million Through Baht Bond Issuance Twin Pine Group announces the success of the debut cross-border bond by a Myanmar-focused company

Mr. Adisorn V. Singhsacha, founder and CEO of Twin Pine Group Co., Ltd. ("Twin Pine"), a leading advisor for cross-border fundraising for companies based in Cambodia, Laos, Myanmar and Vietnam ("CLMV countries"), announces the success of the first...

KBank reserves 48 billion Baht in cash for the Chinese New Year Festival

KASIKORNBANK maintains 48-billion Baht cash reserves for KBank Branches and K-ATMs to serve customers during the upcoming Chinese New Year holidays, February 2-5, 2019. Of that total, 22.3 billion Baht is for branches nationwide, 9.2 billion Baht of...

Photo Release: Maybank organize eMpowering Youths Across ASEAN

On January 22, 2019 at ASEAN Studies Center Chulalongkorn University, Nora Abdul Manaf, Group Chief Human Capital Office and Group EXCO of Maybank, together with H.E. Vijavat Isarabhakdi, Advisor to Minister of Foreign Affairs, Ministry of Foreign...

Fitch Ratings: GPSC#s Debt to Rise Ratings Still on Watch

Fitch Ratings says Global Power Synergy Public Company Limited's (GPSC, A+(tha)/Rating Watch Negative) plan to invest in the Energy Recovery Unit Project (ERU) - a 250 MW thermal power plant that is part of Thai Oil Public Company Limited's (TOP,...

Related Topics