June 23, 2010

• Indonesia continues to consolidate its robust economic performance, but risks remain large and tilted to the downside
  
  
• Capital flows and financial markets were especially volatile in May, and policy makers appear to have managed this adeptly
  
  
• Growth, while milder than late 2009, remains solid…and inflation moderate
  
  
• Consumer prices continue to grow less quickly than economy-wide prices, potentially biasing down government revenue projections
  
  
• …suggesting, with poor disbursement in early 2009, the budget deficit will be smaller than projected
  
  
• Forecasts of growth, and inflation in 2011, have been raised.
  
  
• But these projections are sensitive to the uncertain outlook for commodity prices.
  
  
• Longer-term structural issues need to be addressed to ensure that economic growth can improve…and leads to sustainable improvements in Indonesians’ quality of life.