Assessing Indonesia's Economic Performance in 2007 - 2012: the Resilient Rising Economic Power in the Midst of Global Crisis
Assessing Indonesia’s Economic Performance in 2007 – 2012
The Resilient Rising Economic Power in the Midst of Global Crisis
Indonesia is one of the developing countries who possess potential to grow as a new economic power both in Asia as well as in the world. Indonesia, alongside China and India, were the countries with the best and most consistent economic growth for the past five years. Indonesia grows at an average rate of 6% every year since 2007. Even the collapse of world financial system which was started by the bankruptcy of Wallstreet financial giants like Bear Sterns, Lehman Brothers, Meryl Linch, and world insurance giant, AIG, which drove the world to global financial meltdown and world economic recession; which was the worst after the Great Depression, on the period of year 2008 until economic recovery phase of United States in 2010, Indonesia stayed to grow above 6% annually. Greece’s sovereign debt crisis which pulled another economic catastrophe in Europe in 2010 also did not hinder Indonesia to be one of three states who has the most impressive positive economic growth.
There are two main factors which sustained Indonesia’s economic position throughout the crisis even though the world economy was wrecked. First, Indonesia has humongous amount of middle income class society. The middle income class society has an important and significant feature in a developing economy like Indonesia; it has increasing purchasing power along with the increase of per capita gross domestic product. With such huge purchasing power, society’s consumption becomes enormous, which made the Indonesia’s domestic consumption strong enough to sustain it through the crisis. Household consumption reached 58.7% of gross domestic product on year 2009. So when external markets were not able to absorb Indonesia’s export, the extensive domestic market were able to become a substitution for the goods’ destination.
Consumption has long become a growth driver of developing
The Resilient Rising Economic Power in the Midst of Global Crisis
Indonesia is one of the developing countries who possess potential to grow as a new economic power both in Asia as well as in the world. Indonesia, alongside China and India, were the countries with the best and most consistent economic growth for the past five years. Indonesia grows at an average rate of 6% every year since 2007. Even the collapse of world financial system which was started by the bankruptcy of Wallstreet financial giants like Bear Sterns, Lehman Brothers, Meryl Linch, and world insurance giant, AIG, which drove the world to global financial meltdown and world economic recession; which was the worst after the Great Depression, on the period of year 2008 until economic recovery phase of United States in 2010, Indonesia stayed to grow above 6% annually. Greece’s sovereign debt crisis which pulled another economic catastrophe in Europe in 2010 also did not hinder Indonesia to be one of three states who has the most impressive positive economic growth.
There are two main factors which sustained Indonesia’s economic position throughout the crisis even though the world economy was wrecked. First, Indonesia has humongous amount of middle income class society. The middle income class society has an important and significant feature in a developing economy like Indonesia; it has increasing purchasing power along with the increase of per capita gross domestic product. With such huge purchasing power, society’s consumption becomes enormous, which made the Indonesia’s domestic consumption strong enough to sustain it through the crisis. Household consumption reached 58.7% of gross domestic product on year 2009. So when external markets were not able to absorb Indonesia’s export, the extensive domestic market were able to become a substitution for the goods’ destination.
Consumption has long become a growth driver of developing
References: * Asian Development Bank. 2011. Asia 2050: Realizing Asian Century. * Eggleston, Karen. 1998. The Sustainability of East Asian Growth. ASEAN Economic Bulletin, Vol. 14, No. 1 (JULY 1997), pp. 14-31. * Kunt A.D, Detragiache E. 1998. The Determinants of Banking Crisis in Developing and Developed Countries. IMF Staff Papers, Vol. 5 No. 1. * Wardhana, Ali. 1995. Economic Reform in Indonesia: The Transition from Resource Dependence to Industrial Competitiveness. * Indonesia Balance of Payment Report: Realization of Quarter II 2012 (August 2012) from Bank of Indonesia * Financial Note & National Budget and Expenditure Planning 2013 (2012) from Ministry of Finance, Republic of Indonesia * National Budget Main Data, 2006 – 2011 from Ministry of Finance, Republic of Indonesia