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Ministry Of Finance Republic Of Indonesia

Ministry Of Finance Republic Of Indonesia. 11 TH AUN EDUCATIONAL FORUM AND YOUNG SPEAKERS CONTEST 20 TH JUNE 2009. 1. Outline. Global Economic Outlook Impacts for ASEAN, Responses and Challenges Impact of Indonesia’s Economic Indonesia Policy Responses Conclusion. 2.

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Ministry Of Finance Republic Of Indonesia

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  1. Ministry Of Finance Republic Of Indonesia 11TH AUN EDUCATIONAL FORUM AND YOUNG SPEAKERS CONTEST 20TH JUNE 2009 1

  2. Outline • Global Economic Outlook • Impacts for ASEAN, Responses and Challenges • Impact of Indonesia’s Economic • Indonesia Policy Responses • Conclusion 2

  3. Trend Economy Global 2004-2008 3

  4. Global Crisis : From US to ASIA …………….. March 2007 March2008 April 2008 Oktober 2008 November 2008 September 2008 September 2007 February 2009 January 2009 February 2009 March 2009 April 2009 May 2009 June 2009 4

  5. Global Economic Outlook 5

  6. Downward Revision in Global Growth Outlook 2009 (%), but optimistic rise in2010 The projection of world economic growth and trade projection are getting lower, but optimistic rise in 2010 Trade growth projection is negative in 2009 and revised to be positive in 2010 supported by increasing of trade activities (Baltic Dry Index). Baltic Dry Index 6

  7. Projected Economic Growth in the World 2009 6 RUSIA 4,2 EU 2,5 CANADA 5,6 GERMAN 4,1 UK CHINA 6,5 5,1 TURKEY 2,8 USA 6,2 JAPAN 4,4 ITALY 3,0 FRANCE 3,0 Thailand 3,7 MEXICO 4,0 South Korea INDIA 4,5 0,9 S Arabia 3,5 Malaysia Philipine 0 10 Singapur INDONESIA 2,5 1,3 BRAZIL Revised by IMF in June ’09: 3%-4% 1,4 Australia 1,5 Argentina 0,3 S Africa 7 : Economic growth(+) : Economic growth (-)

  8. Some financial institutions shown a great contraction (>USD 750 Billion) Market value- January 20th 2009, $Bn Market value - per Q2 2007, $Bn BNP Paribas RBS UBS Deutsche Bank Credit Agricole Societe Generale Barclays Unicredit 120 116 Morgan Stanley 108 93 91 80 76 67 49 4.6 16 10.3 26 7.4 32.5 26 35 17 Citigroup HSBC 215 255 JP Morgan 165 Goldman Sachs Santander Credit Suisse 116 100 75 64 85 97 27 35 19 8

  9. Private Flow from Developing Country (Emerging Market) 2007-2009 > US$700 milyar 9

  10. The World Financial Sector Recovery Program Through Toxic Asset Recapitulation and Banking( commitment : 2,5 trillion USD ) Russia 32,6 M Canada 59,6 M Europe 349,3M South Korea 19,3 M US 1,8 T China 19,2 M Japan 147,6 M Singapore dan Hong Kong 10 M Brazil 3,8 M Australia 5,2 M Angka dalam $ US 10 10

  11. Impacts for ASEAN, Responses and Challenges 11

  12. ASEAN economy plunged in Q1 2009 Indonesia and Philippine remains positive growth……… 12

  13. Appreciation of Stock Indices and Exchange Rate YTD Performance as of 1st June, 2009 Source: Bloomberg, 13

  14. Fiscal Stimulus in Some Countries: USD 1,4 Bn China United Kingdom Japan United States Stimulus 13,3% Deficit 3% Stimulus 1,0 % Deficit 10% Stimulus 3,1 % Deficit 7,1% Singapore Philipine Stimulus 5,5% Deficit 12,30% Stimulus 6,4% Deficit 1,1 % Stimulus 4,% Deficit 2,2% Malaysia Indonesia Stimulus 4,4% Deficit 3,1% Stimulus 1,4 % Deficit 2,5% 14

  15. Indonesia’s fiscal stimulus to mitigate the global crisis impact in line with other Asian countries ... • Indonesia,s fiscal stimulus budget amounted 1.4% GDP • Decreasing of BI Rate The BI Rate decreased 250 bps since Nov 2008 JPN 15

  16. ASEAN Responses… • ASEAN Economic Community (AEC) 2015 • Trade reduction AFTA • Financial Integration • ASEAN+3 Pooling Reserve • Capital Market • Intrastate Fund • ASEAN Bonds Market • Customs Operations 16

  17. Boosting endurances in banking system • Nearly all economies in the region have injected liquidity, including through new facilities, extending the range of collateral or easing access to central banks’ discount windows. • A number of economies have extended guarantees to bank deposits (Indonesia, Malaysia, Singapore) and bank debts. • Some economies announced plans for bank recapitalization contingency funds.

  18. Looking Ahead: Key Challenges for Policymakers in ASEAN • Policy makers need to minimize further tightening of overall credit conditions and its spillovers to the economy, including • continuing to supply the banking system with appropriate liquidity • dealing early and decisively with problem banks (extending bank guarantees and recapitalizing where appropriate) • action needed to guarantee trade financing • mechanisms to dispose of impaired assets and facilitate corporate restructuring should be enhanced • Moreover, there is still room for macro policies • with inflation projected to moderate, monetary policy could be eased further to support growth • many economies also have room to ease the fiscal stance

  19. Impact on Indonesia’s Economic

  20. Economic Growth projection Q1 2009  4,37%Much better than the WEO projection (April 2009) 2.5% Source: Indonesia National Statistic Bureau 20

  21. Indonesian financial condition is getting better as investor trust return to normal shown by positive trend of stock and bond transaction JCI 18 Juni 1950,987 tThe Movement of JCI from December 2007 June8`th 2009 IDR 18 Juni 10.425 Source: Bloomberg 21

  22. Indonesia Foreign Reserve position remain stable (May 2009 USD 57.87 Billion) 60.6 55.9 12 Juni: 57.29 43,3 June 2009 22

  23. Indonesian Balance of Payment is better than expected.Both Current and Capital Account show a significant surplus Sources: Bank Indonesia 23

  24. Indonesia’s Policy Response 24

  25. Goverment measures to mitigate the crisis Banking and Financial Sector • Central Bank reduce policy rate due to the lower pressure of the inflation rate • Placement liquidity of funds in the state-owned bank • Preparing the Financial Sytem Security Network • Banking rescue for systemic risk Real Sector • Fiscal Stimulus program consist of Infrastructure Project, Tax Facilities and production cost reduction through fee cuts, and energy cost rebate and industrial rate discount • Direct subsidy Foreign Exchange Stability • Maintain the reserve stability by managingstate owned foreign exchange transaction to reduce trade speculation and providing trade financing facility • Increasing the fund financing through bilateral and multilateral agreement with Japan, China, ASEAN+3 and G-20 25

  26. Conclusion … • Despite the global recession, Indonesian economy expected to remain strong and solid. • Macroeconomic management is improving capital inflow continued to support the stable rupiah, an effective stimulus fiscal will likely outlast the election session. • The 2009 growth expected to achive 4 to 4,5% and accelerated in 2010, sipported by external factor & investment pick-up. 26

  27. THANK YOU

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