- Created: Thursday, 12 April 2018 07:05
- Written by BDK Yogyakarta
Yogyakarta, Wednesday, April 11st 2018. “Indonesia, since 1970 adopt open economy system. What happen in foreign country will have its impact into domestic. Because of that, we have to know what happen in outside of our country, especially economy condition. During last 2017, global economy is toward recovery, from demand side and pricing. It indicated from commodity price and economy growth of developed country.
We can’t say which one first from both indicators. Is it growth of developed country increasing and then made commodity price increase, or price increase first then economy growth? It need further analysis” said Yoopi Abimanyu. Researcher from Macro Economy Research Center, Fiscal Policy Agency. During his speeches about current issue of Macro Economy in Research Method Training Fiscal Year 2018 in Training Regional Office Yogyakarta.
Yopi continued, that commodity price surge phenomenon it can’t be separated from China’s policy as a member of strongest world economic power. Before commodity price increase, China’s policy mainly rests on investment. All commodity such as oil, coal, copper, gas, and mineral, all are diverted to meet investment need in domestic. It caused price surge, and Indonesia as one of exporter of mention commodity enjoy the increasing price. But lately, China’s policy shifts from investing into consumption, because of the number of its citizen have potentials. It can say that they don’t need to export because its already consumed in domestic. Because of this shifting policy, China’s will not buy commodity massively anymore. Because of decreasing demand, but supply is stable it can decrease price. But today, commodity price slowly increasing again. The cause is still unknown, is it because of China’s buying or demand from developed country. If commodity price is improving, it is a good signal for Indonesia, because it exported commodity.
“Developed country economy growth showed that it improved, before, flat from 0%-1%, even some countries are minus. US, Europe and Japan’s economies are improving. It is a positive impact on global economy. Indonesia which is open economy must see any potential and risk in what happen in other country. Such as increasing of interest rate from Federal Reserve, Shifting of China’s policy to consumption can make Indonesia’s commodity are hard to sell. It shows that what happen on other countries will affect Indonesia” Yopi continued.
Yopi said that there are indicators of domestic economy growth. Gross domestic product, State Budget, balance of payments, monetary and financial sector. Based on data, from year to year, Gross domestic product mainly contributed from household consumption and investment. 2017 fourth quarter, investment sector is the largest contributor followed by consumption sector. Quarterly compared, it shows gross domestic product are increasing, but year to year showed it decrease. Yopie added it need further analysis, is it because of online consumption, digitalization of economic or other cause. In the past, consumption sector always the largest contributor for gross domestic product, but today, investment sector is the largest. It is still analyzed, the decreasing on consumption sector it caused of online consumption or others. In investment sector, one of the reason because state owned enterprise and private sector are instructed to invest in securitization, such as securities.
From state budget side, it shows that there is increase in government revenue realization. Revenue comes from tax, customs tariff, and nontax. There is decreasing in government spending, but transfer to local governments are increasing. With that, we can say that State Budget 2017 actively push local economy to growth. Export import lookout shows that average export higher than import, trade balance become surplus. This increase caused by high demand from manufacture sector and trade partner country and increasing in global commodity price. Import side still need analysis which sector that was increased such as capital goods, raw material, or consumer goods. But with surplus trade balance will decrease out dependency on capital inflow. From monetary side, there are 3 variables to assess domestic economy condition, inflation, interest rate, and exchange rate. Inflation is responsibility of government and central bank together. Inflation rate in the last 2 years are relatively stable. Coordination between Ministry of Finance, Central Bank, Statistics Indonesia, and Ministry of Commerce suspected as main reason for stable inflation.
At the end of speech, Yoopi summarized that global economy are optimism now, but still there are risks, such as Brexit, China’s shifting economy policy, Trumps effect on export import. Meanwhile domestic economy showed gross national product increasing, fiscal revenue, decreasing in spending but increasing in transfer to local, surplus trade balance, increase in foreign exchange reserves, stable inflation, decrease interest rate, but rupiah’s exchange rate decrease and same to IHSG. It is a global phenomenon not only in Indonesia. Overall, Indonesia’s economy is better and supported by optimism on global economy.