Indonesian Economic Outlook:The New Normal and Beyond

Mari Pangestu
Economics Professor at the University of Indonesia and former Trade Minister and Minister of Tourism & Creative Industry

The outlook for Indonesia in the short term is related to how well Indonesia continues to navigate the risks and fend off the headwinds to the 'new normal' and recent external contingencies, and most importantly, in the medium term how it will lay the foundations to go beyond the new normal.

The term 'new normal' was coined in 2013 as the post-world economic crisis adjusted back to a 'normal' situation without easy money and fiscal stimulus driven growth, the end of the commodity boom, and rebalancing and restructuring of China. The tapering of quantitative easing in the US and the subsequent expected increase in US interest rates in 2013 led to capital outflows and depreciation of currencies of a number of major economies termed as 'fragile five', including Indonesia.

December 23, 2014