Indonesia 2010, growing faster

Prospects of Indonesia's economy can not be separated from the movement of the world economy. There are indications that the process of world economic recovery will also be sustainable.

This situation, which is supported also by the positive developments in the country, making the prospect of the Indonesian economy in 2010 will be even brighter than 2009. Economic data recently showed that the global economic recovery is happening.


This is partly demonstrated by the positive growth that began to happen in some countries.

Economy of the United States (U.S.) for example in the third quarter 2009 and grew at a rate of 2.8% (annualized). Australia had already raised its reference interest rate three times, once at the beginning of October, one in early November, once in early December (the current interest rates there are at 3.75% level). The move comes as central banks these countries saw the recovery process is going quite sustainable and will continue until 2010.

However, unemployment is still high in some countries make many people are still concerned about the sustainability of the recovery process is happening. Unemployment in the U.S. for example, currently still in the range of 10%. U.S. economic developments affect our economy so that in principle up to now the U.S. is still the main engine of the world economy.

It was hard to expect a brighter world economy if the U.S. economy is still down. Still, there are indications that the recovery in the U.S. economy will be sustainable. This could be seen from the business cycle indicators the U.S. economy. There are two main indicators used by economists to determine the economic position of the coincident economic index (CEI) and the leading economic index (LEI).

CEI is an index that measures the economic situation in each saat.Sedangkan LEI is the index that can see the economic prospects of six to twelve months ahead. CEI describes the rise of increased economic activity. Conversely, a fall CEI describes the declining economic activity. While LEI the rise explain prospek improved economic activity, and LEI is down describes the prospects deterioration of economic activity.

As we know, to prevent the slump in the U.S. is not too deep and long, both central banks and governments have given a stimulus large enough quantities. The Fed has lowered interest such as a reference to 0-25 bps. Given stimulus seems to be showing results. Since June 2009 CEI did not go down again (Figure 1).

That is, reduction in economic activity there has begun to subside. In addition, LEI also have increased continuously since in March 2009. In October 2009 already exceeded the level of LEI in September 2007.Tren level rise that occurred LEI seems quite strong and sustainable. This suggests improved prospects for a sustainable U.S. economy.

Thus, in the not too long CEI (an index that describes the state of the economy at a time) is expected to rise to more significant following the upward trend LEI.Artinya, the process of economic recovery in the U.S. seem to be sustainable.

Most economists had predicted the world economy will grow at a rate of 2.5% in 2010 (estimated to have contracted by 2.4% in 2009). Not only that, the global economy as a whole was expected to grow faster. Japan for example is expected to grow 1.2% (5.7% contraction in 2009). While Europe is forecast to grow at a rate of 1.1% (3.8% contraction in 2009).

Indonesia's Economic Prospects

Indonesia will receive the positive impact of the global economic expansion. Global economic growth faster will increase the demand for products from Indonesia. This means that our exports have been looking a little sluggish will soon rise again, which in turn will provide a positive impact on economic activity.

In such circumstances, Indonesia's export growth rate next year is estimated to reach about 12.9%. In addition, our people's purchasing power was still enough fine. Price seems relatively restrained throughout 2009 to make people's purchasing power is not eroded significantly. In 2010 the price level still seems to be relatively under control. Expected inflation rate would still be in single digit range, at around 6%.

With the prospect of such inflation, the chances of Bank Indonesia (BI) will not change its reference interest rate until the end of 2010. Interest rates will also remain quite conducive to economic growth. Although currently not down to a level that should be, interest rates expected to fall to a lower level lagi.Bila this happens, an additional impetus to the economy will emerge.

Consumer spending will be even stronger because of low interest rates will make consumers become more reluctant to borrow money from banks. The same thing happened to the company. With interest rates lower, the firm is not reluctant to borrow from banks and increase the realization of investment plans. In such circumstances, the household expenditure in 2010 is forecast to grow at a rate of about 3.9%.

While the investment is expected to grow at a rate of about 12.2%, much higher than the estimated growth rate of about 4.3% in 2009. Imports were estimated to grow at a rate of 17.3% or much faster than the contraction of 18.5% in 2009.

An increase in domestic demand along with the accelerating pace of domestic economic growth, coupled by rising demand for raw materials for export-oriented production, is expected to trigger a significant increase in imports in 2010.

Indonesia's economy as a whole is forecast to grow at a rate of 6.0% in 2010. This figure is significantly higher than the rate of economic growth in 2009. Estimated growth in 2010 mentioned above may be considered part of the too optimistic.

When the global economy was collapsed and our economy grew less than 5%, 6% growth forecast it would feel too tinggi. Althoug so the long-term trend rate of growth of our economy today is around 6%. If there were no negative surprises too large (such as the global economic recession) and if we do not make mistakes that are too silly policy, our economic growth will tend to move towards 6%.

We ecomic developmen adition can actually grow over 6% if the government can realize its promises to build infrastructure projects like electricity, roads, and ports. This lack of available infrastructure, among others that make the cost of distribution of goods to be expensive (to make high inflation and high interest rates), reducing the competitiveness of our products overseas, and worsen the investment climate in our country.

The discussion above shows that the economic prospects of Indonesia in 2010 will be brighter than the economic situation in 2009. Restoration of the global economy, low inflation and interest rates, the maintenance of purchasing power, and increased investment activity is expected to support our economic expansion in 2010.