At the time this issue is written, the debt crisis in Europe continues to be crucially important, as has a lot of influence on the World economy. Economic growth in several countries which have for long become engines that kept the rest of the world humming, are today facing uncertainty. Amidst such global economic uncertainty, the International Monetary Fund (IMF) predicted global economic growth of 3.3 % 2012, which is the lowest since 2009. However, IMF predicts a slight improvement in 2013 when the world economi will register 3.6 % in economic growth, which is lower than 3.8 % posted in 2011.

 Uncertainty which has emanated from the crisis in Europe continues to drag down the global economy and in turn the Indonesian economy in two ways namely trade and international finance. As an open economy, Indonesia depends on the economic conditions that obtain in other economies, especially with respect to imports and exports. The implication of this is that Indonesia has high vulnerability to slow economic growth that affects other countries. This is apparent from the difficulty which Indonesia faces in achieving economic growth targets set by the government. Indonesian economy registered 6.17% in economic growth in the third quarter 2012 on year on year basis. This was lower than 6.37% posted in the second quarter 2012. Slower economic growth in the third quarter is a direct consequence of the impact of the crisis in Europe. Moreover, based on IMF prediction, Indonesian GDP will register by 6% in 2012 and 6.3% in 2013, an indication that sluggish economic growth posted in 2012 will continue through 2013.

 The ability to maintain the achievement of a positive economic growth (although still relatively low), during the global crisis, mainly because of domestic aggregate, particularly Gross Fixed Capital Formation and Household Consumption. As is evident in Figure 1, from the vantage point of expenditure, GDP growth in the third quarter 2012, is underpinned by growth in Fixed Capital Formation which grew by 10.02 % (yoy) and Household Consumption which posted 5.68% growth (yoy). Meawhile, Government Consumption, Exports and Imports contracted compared with the previous period. In comparison with the third quarter of 2011, the growth in Government Consumption registered stood at – 3.22 % (yoy), which is attributable to the low budget absorption. By November 2012 the budget absorption or requisition level was IDR 1,112.1 trillion or 71.8% of the Revised National Budget 2012 of IDR 1,548.3 trillion.   Meanwhile, export of goods and services in the third quarter of 2012 decreased by -2.78% (yoy). There is also sign of slowdown in import, which posted contraction of -0.54% (yoy).

 As regards production, as is evident in Figure 2, Transportation and Communications sector posts the highest growth of 10.48% (yoy), followed by Construction sector for about 7.98%, and while Financial Services, Real Estates, and Service Industry registered 7.41%. Meanwhile, Mining an Extraction sector posted contraction of 0.09%. It is interesting to note that Transportation and Communications sector, which registered 10% growth,   has lowered compare to pervious periods.

Although the economy posted a decrease in economic growth, the level of unemployment shows a decrease in August 2012 compared with the same period in the previous year. This is reflected in a decrease in unemployment. Open unemployment in August 2012 decreased from the rate in February 2012. In August 2012, the number of unemployed was 7.24 million or 6.14% compared with 7.61 million or 6.32% in February 2012. Moreover, unemployment in August 2012 was lower than unemployment in the same period in 2011, which accounted for 6.56%.   The decrease in unemployment in Indonesia is also reflected in the decrease in the work force in August 2012. In August 2012 the percentage of workforce in Indonesia was 67.88%, which was a decrease from 69.66% in February 2012.