Indonesia looks for remedies after economy slows

Global Business

Indonesia looks for remedies after economy slows2

Most countries would be thrilled to see their economies growing close to five percent. But that qualifies as an underachievement for Indonesia.

A slump in the price of commodities led to Indonesia’s slowest expansion in six years in 2015 and growth again fell short of expectations in the first quarter of this year.

That’s prompted the government to look for new engines to drive the economy.

CCTV’s Rian Maelzer has more. Follow Rian Maelzer on Twitter @rdamael

Indonesia looks for remedies after economy slows

Indonesia looks for remedies after economy slows

Most countries would be thrilled to see their economies growing close to five percent. But that qualifies as an underachievement for Indonesia. A slump in the price of commodities led to Indonesia’s slowest expansion in six years in 2015 and growth again fell short of expectations in the first quarter of this year.

Poverty rates in Indonesia have been steadily declining for many years. But the gap between rich and poor has been widening. And that’s a worry for President Joko Widodo, or Jokowi, whose core support comes from lower income groups.

“So it makes a burden for Jowoki to make sure the government is moving in the right direction to decrease the poverty,” Mohamad Fahmi, and economist at the University of Padajaran said.

Jokowi’s 18 months in office have thrown up big economic challenges with slowing demand, and sliding prices of commodities such as hydrocarbons, palm oil and minerals on which the country has been relying. Last year’s growth was less than 5 percent, with economists believing Indonesia is capable of much better.

The government is aiming to swiftly diversify the economy — reducing reliance on commodities and developing sectors such as manufacturing, e-commerce, and tourism to places other than Bali.


Ankur Patel talks about Indonesia’s economy

For more on the future of Indonesia’s economy and the rest of the year’s outlook, CCTV America’s Michelle Makori spoke with Ankur Patel, chief investment officer and director of R-Squared Macro Management.