April, 2010

• Indonesia’s economy built momentum through 2009, with government policies supporting growth, but maintaining this momentum will be a policy challenge
  
  
• Growth returned to pre-crisis peaks in Q4 and other indicators were in sharp contrast to late 2008
  
  
• The budget deficit was smaller than expected in 2009, with the stimulus supporting growth…
  
  
• …but the government proposes to defer energy price adjustment in 2010, expanding this year’s projected deficit.
  
  
• Foreign investors continued to seek Indonesian financial assets, driving government bond yields to record lows…and challenging the central bank.
  
  
• The outlook has strengthened slightly since late 2009
  
  
• Maintaining this momentum into the medium-term will require supporting entrepreneurs’ investments, both by investing in infrastructure and the quality of public services, and ensuring all Indonesians benefit from the economy’s growth.