The impact of sluggish economic growth in US and Europe has begun to bear on Indonesia, as reflected in the decrease in exports. Despite the fact that Indonesia succeeded in registering economic growth of 6.23 % YoY in 2012, making one of best performing economy in Asia after China, which recorded economic growth of 7.8% (YoY). However the achievement is tempered by the fact that 2012 growth figure is in fact lower than the assumption of 6.5% which was used in making National Budget (APBN) for 2012. Moreover, economic growth rate for 2012, is even lower compared to economic growth registered in 2011, which able to reach 6.5% (YoY). In 2012, the value of Indonesian Gross Domestic Product (GDP) in 2000 constant prices was IDR 2,618.1 trillion, which was an increase of IDR 153.4 trillion from IDR 2,464.7 trillion in 2011.
Based on its expenditure, Gross Fixed Capital Formation (PMTB) or physical investment was the sector that posted the highest growth of 9.81% (YoY) in 2012. However, based on quarterly data, PMTB growth registered a significant decrease. In the fourth quarter of 2012 in year on year terms, the growth of PMTB was 7.29%, which was lower than the previous quarter that registered growth of 9.80%. Moreover, in the second quarter 2012, PMTB grew by 12.47% (YoY). PMTB has extensive multiplier effect as it does not only impact on production but also stimulates consumption. PMTB promotes the creation and expansion of employment opportunities, increases people’s incomes, which in turn stimulate people’s consumption.
Besides PMTB, private consumption, which grew by 5.8% (YoY) also contributed substantially to economic growth in 2012. Meanwhile, government consumption, posted 1.25% (YoY), which was lower than expectations.
In the meantime, Indonesia economy has begun to feel the ripples of anemic growth of the global economy through falling exports which is attributable to weakening demand for exports in the destination countries. In 2012 Indonesian exports grew by 2.01% (YoY). Imports on the other hand, registered higher growth of 6.65% (YoY). In quarterly terms, Indonesian imports posted growth of 6.79% % (YoY) in the fourth quarter 2012, which a reversal of the performance in the third quarter that showed 0.17% (YoY) contraction. The increase in imports is by and large, attributable to rising oil and gas as well as non oil and gas imports. Besides, the increase in imports is also caused by a surge in imports of raw materials and capital goods. In 2012, imports of raw materials reached IDR 140,127.6 million, or posted 7.02% growth compared with IDR 130,934.3 million in the previous year. Meanwhile, the value of imports of capital goods reached IDR 38,154.8 million, which constituted 15.24% growth compared with IDR 33,108.4 million registered in 2011. In light of that Indonesia has registered a trade deficit as the value of imports is higher than exports.
To that end, given uncertainty that still characterizes the global economy; Indonesian economy will continue to rely on domestic consumption and investment as source of economic growth in 2013. This is because falling global demand means that Indonesian exports will continue to decrease.
With respect to industrial origin, 9 sectors registered positive growth in 2012. In 2012, Transportation and Communications sector posted the highest growth (9.98%), which was followed by Trade, Hotel, and Restaurant sector (8.11%), and Construction (7.50%). The lowest growth in 2012 was the Mining and Quarrying sector which registered 1.49%, attributable largely to the decline in mineral prices.
Meanwhile, all sectors of the Indonesian economy contributed to economic growth registered in the fourth quarter 2012. That said, Mining and Quarrying posted the lowest growth of 0.48% (YoY). In the fourth quarter 2012, 6 sectors posted growth that surpassed GDP growth rate of 6.11%. The sectors included Transportation and Communications (9.63%); Trade, Hotels and Restaurants sector (7.80%); Construction (7.79%); Manufacturing (7.79%); Financial, Ownership and Business (7.66%); and Electricity, Gas and Water Supply (7.25%).
Despite signs of weakening economic growth, employment condition in Indonesia showed an improvement compared with the previous period, which contributed to the decrease in the unemployment level. Unemployment in Indonesia decreased in August 2012 compared with the February 2012. In August 2012, unemployment stood at 7.24 million or 6.14%, and decreased to 7.61 million or 6.32% in February 2012. It is also worth noting that unemployment level in August 2012 was lower than the level registered in the same month in the previous year (6.56%). That said, decrease in unemployment level in Indonesia can be attributable to the decrease in Indonesian work force in 2012. In August 2012 Indonesia work force was 67.88%, which was a decrease from 69.66%. in February 2012.
