LPEM FEBUI Quarterly Economic Outlook 2015 Q4

Febrio Kacaribu (), Alvin Ulido Lumbanraja and Faradina Alifia Maizar
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Febrio Kacaribu: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)
Alvin Ulido Lumbanraja: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)
Faradina Alifia Maizar: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)

No 201504, LPEM FEBUI Quarterly Economic Outlook from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: Since we published our previous quarterly outlook, we have continued to witness how things that are statistically supposed to happen very rarely become normal shocks in the global economy. The oil price dropped by about 50% in the last 6 months. Within the same period, Shanghai SE Composite Index fell by about the same magnitude. Last, but not least, a surprise comes from Bank of Japan last week when it introduced the new regime of monetary policy – the negative interest rate. These shocks and potential new shocks will make global economy this year as unpredictable as the previous one, if not more. Indonesian economy, which showed a relatively high resiliency in 2015, once again will be tested in 2016. Despite the volatile global economy, we continue to believe that the underlying Indonesian economy is fundamentally stronger than currently perceived by market participants. Considerable external risks will continue to negatively affect domestic growth. Exports, which are still dominated by raw commodities, will continue to shrink along with significant decline in commodity prices. Reduced risk appetite among global investors will also negatively affect investments growth, both portfolio and FDI. Growth, however, will still be much supported by consumer spending, return of much-needed capital spending following credit easing by commercial banks in recent months, and BI's decision to cut interest rate earlier this month.

Keywords: gdp; —; economic; quarterly; —; economic; outlook; —; inflation; —; macroeconomics (search for similar items in EconPapers)
Date: 2015-04, Revised 2015-04
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http://lpem.org/repec/lpe/queouts/IEO201504.pdf First version, 2015 (application/pdf)

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