Indonesian Economy: 
        Prospects and Challenges in  
             the Current Cycles 
                 Juda Agung, PhD 
                  Executive Director 
           Department of Economic and Monetary Policy 
                    Presented at  
        International Seminar Befriending with the  “Boom-Bust“ Cycle 
                Jakarta, 23 September 2014 
 Outline                                                                         2 
                                    1                                       2 
                                              
       Recent Global & Domestic Cycles             Characteristics of Indonesia’ 
                                                   Business and Financial Cycle 
                                    3                                       4 
                                              
              Prospects, Risks and Policy                              Closing 
                             Responses 
 Global Business Cycle: Changing global landscape…                                                                                                           3 
  Global recovery continues with a shift in economic landscape… 
     Growth in AE is projected to improve and be above its long term trend. On the other hand, 
         growth in EM is forecast to be lower than its long term trend due to a number of structural 
         challenges in the EM economies. 
               Long Term Global Growth, AE, and EM                                                   US GDP Potential vs Actual 
                                                                                                                                        Source: 
                                                                                                                                        Congressional 
                                                                                                                                        Budget Office 
                                                                                                    Realisasi                      Proyeksi
                                                                                     US Output Gap     2013     2014      2015     2016     2017     2018     2019
                                                                                                        -3.8       -4     -2.9       -2     -1.1      -0.6       0
                                                                                     IMF Article IV July 2014
   Global Commodity Cycle: End of Supercycle?                                                                                                                                                            4 
   Global commodity prices continues to decline … 
     The rapid rise of commodity prices starting in 2002 has boosted economic growth in commodity 
           producing countries but the expansionary phase of the commodity price supercycle may have 
           come to an end. 
     Sustained decline in commodity prices is confirming the end of commodity price “supercycle”. 
            
                                                            International Commodities Price Trend 
              600                                                                                             400 
              500 
                                                                                                              300 
              400 
              300                                                                                             200 
              200 
                                                                                                              100 
              100 
                  0                                                                                               0 
                   2002         2004         2006          2008         2010         2012      2013                2002         2004          2006         2008          2010         2012     2013 
                                               All commodities                                                                                Food 
                                               All commodities (in euros)                                                                     Tropical beverages 
                                               Minerals, ores and metals                                                                      Vegetable oilseeds and oils 
                                               Crude petroleum                                                                                Agricultural raw materials