The Global economic condition in 2017 started to indicate recovery signs as driven by the emerging economic growth in the United States, Europe and China. The volume of the world’s trade and commodity prices increased significantly because, particularly, China began to increase its import demand.
The impact of higher demand for non-oil and gas commodities encouraged Indonesia’s export performance. Cumulatively, the value of Indonesian exports in 2017 reached USD168.73 billion, increased by 16.2% compared to 2016. The increase in exports mainly came from the rising value and volume of non-oil exports, such as palm oil (CPO) and coal.
The recovery of the global economy also affected the domestic economy. The Central Bureau of Statistics (BPS) announced that Indonesia’s economic growth in 2017 reached 5.07%, slightly higher than 5.03% in 2016. Despite the insignificant increase, Indonesia has entered the recovery momentum. Several macroeconomic indicators reflected macroeconomic stability and a well-controlled financial system.
Consumer Confidence Index (IKK) survey conducted by Bank Indonesia (BI) in December 2017 showed an IKK of 126.4, an increase compared to 122.1 obtained in the November 2010 survey. The increased consumer confidence was driven by improved consumer perceptions of the current economic condition as well as their expectations of the future economic condition.
Jakarta Composite Index (IHSG) at the close of trading on Indonesia Stock Exchange (IDX) also gave an optimistic picture. IHSG was closed at 6,355.654 or grew by 19.99% since the beginning of the year. This indicated that investor confidence in Indonesia’s economic condition is increasing.
The world’s perception of Indonesian economy has also improved. It was reflected on investments grade awarded by three leading credit rating agencies in the global investment sector, namely; Fitch, Standard & Poor’s, and Moody’s Investors Services. On December 20, 2017, Fitch upgraded Indonesia’s rating to a stable outlook (BBB), which was the highest grade for Indonesia since 1995.
Economic improvement was a result of the efforts made by the government to stimulate growth. Massive development of infrastructure projects has encouraged the performance of other sectors, although not in a short time. Government spending on infrastructure drove private investment and household consumption growth. The economic policy packages issued by the government are also perceived as an effort to encourage acceleration of the investment and economy.
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