June, 2009

• The global economic downturn has impacted Indonesia’s growth, but later and by less than elsewhere
  
  
• Indonesia’s financial markets were affected by the global financial turmoil, but have lately staged a strong recovery
  
  
• The banking sector remains in good health, but new lending has been cut
  
  
• And lower global commodity prices and global demand compression have hit Indonesia’s exports…and imports
  
  
• ..as well as firms’ profitability, leading to cuts in investment, employment, and consumer demand
  
  
• Consumer prices have stabilized, allowing Bank Indonesia to loosen monetary policy
  
  
• Despite the global downturn, Indonesia’s external position remains sound, the country’s significant external financing obligations are being met, and reserves have risen slightly
  
  
• Indonesia’s public finances are strong, allowing policy makers to quickly move to offset the global downturn’s effects on Indonesia
  
  
• The global downturn will continue to slow Indonesia’s growth
  
  
• … and limit gains on social indicators, particularly poverty reduction