Is Being Stuck with a Five Percent Growth Rate a New Normal for Indonesia?

Budy Resosudarmo and Abdurohman Abdurohman

Bulletin of Indonesian Economic Studies, 2018, vol. 54, issue 2, 141-164

Abstract: Indonesia’s economic growth over the past three years has been stuck at approximately 5% annually, despite a changing global environment and the Indonesian government’s efforts to boost growth. This paper asks whether this level of growth is a new normal for Indonesia—i.e. do government efforts and the global environment matter, or will the country’s economic growth remain at around 5% annually. If private consumption, the major component of GDP, continues to grow at its current level and inflation is controlled, this paper concludes that Indonesia might maintain its current annual growth rate of 5% for several more years. The probability of higher growth, however, is not promising. Lower growth seems more likely. To ensure the current level of economic growth will be sustained in the foreseeable future, this paper recommends stricter economic reforms to allow larger and more productive capital investments; more aggressive management of exchange rates to improve the country’s competitiveness; a more effective fiscal space to support improvements to needed infrastructure by developing innovation to increase revenue; a reduced energy subsidy; and a more flexible upper bound of deficit. Effective programs to improve the country’s human capital and innovation are crucial.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.1080/00074918.2018.1521776 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:bindes:v:54:y:2018:i:2:p:141-164

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CBIE20

DOI: 10.1080/00074918.2018.1521776

Access Statistics for this article

Bulletin of Indonesian Economic Studies is currently edited by Firman Witoelar Kartaadipoetra, Arianto Patunru, Robert Sparrow, Sarah Xue Dong and Sean Muir

More articles in Bulletin of Indonesian Economic Studies from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().