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Indonesia Economy

    Economy—overview: The collapse of the rupiah in late 1997 and early 1998 caused GDP to contract by an estimated 13.7% in 1998 because of Indonesian firms' reliance on short-term dollar-denominated debt and high levels of nonperforming loans in the banking sector. The Indonesian Government initially wavered on meeting the conditions it agreed to in exchange for a $42 billion IMF assistance package, contributing to further loss in investor confidence and outflows of capital. Riots that in many cases targeted ethnic Chinese business owners also set back chances that Indonesia would quickly stabilize its financial crisis and contributed to President SOEHARTO's resignation on 21 May 1998. His successor, B.J. HABIBIE, improved cooperation with the IMF. The money supply—which expanded rapidly early in the year to prop up banks hit by deposit runs—was tightened within a few months, and by October, inflation—which reached a 77% annual rate—was significantly dampened. The government also announced a bank recapitalization program in late 1998, but by early 1999 the plan faced growing challenges over its reliance on public funds. Doubts about whether the program is adequate underlie forecasts of continued—although much less severe—GDP contraction for 1999. Signs of spreading unrest and sectarian violence and concern that social instability will increase as the 7 June 1999 national election approaches also contribute to pessimism about the economy, particularly because foreign investors remain reluctant to begin to increase capital inflows again. The next government will face the challenge of establishing a macroeconomic policy framework that addresses longstanding grievances and inequities underlying much of the current unrest without hampering an economic recovery.

    GDP: purchasing power parity—$602 billion (1998 est.)

    GDP—real growth rate: -13.7% (1998 est.)

    GDP—per capita: purchasing power parity—$2,830 (1998 est.)

    GDP—composition by sector:
    agriculture: 18.8%
    industry: 40.3%
    services: 40.9% (1998 est.)

    Population below poverty line: NA%

    Household income or consumption by percentage share:
    lowest 10%: 3.6%
    highest 10%: 28.3% (1995)

    Inflation rate (consumer prices): 77% (1998 est.)

    Labor force: 87 million (1997 est.)

    Labor force—by occupation: agriculture 41%, trade, restaurant, and hotel 19.8%, manufacturing 14%, construction 4.8%, transport and communications 4.75%, other 15.65% (1997)

    Unemployment rate: 15%-20% (1998 est.)

    Budget:
    revenues: $35 billion (of which $15 billion is from international financial institutions)
    expenditures: $35 billion, including capital expenditures of $12 billion (FY98/99 est.)

    Industries: petroleum and natural gas; textiles, apparel, and footwear; mining, cement, chemical fertilizers, plywood; rubber; food; tourism

    Industrial production growth rate: -13.7% (1998 est.)

    Electricity—production: 66.8 billion kWh (1996)

    Electricity—production by source:
    fossil fuel: 82.34%
    hydro: 14.97%
    nuclear: 0%
    other: 2.69% (1996)

    Electricity—consumption: 66.8 billion kWh (1996)

    Electricity—exports: 0 kWh (1996)

    Electricity—imports: 0 kWh (1996)

    Agriculture—products: rice, cassava (tapioca), peanuts, rubber, cocoa, coffee, palm oil, copra; poultry, beef, pork, eggs

    Exports: $49 billion (f.o.b., 1998 est.)

    Exports—commodities: garments 7.9%, textiles 7.3%, gas 6.4%, electrical appliances 5.9%, pulp and paper 5.3%, oil 4.7%, plywood 4.7%

    Exports—partners: Japan 18%, EU 15%, US 14%, Singapore 13%, South Korea 5%, Hong Kong 4%, China 3.9%, Taiwan 3.4% (1998 est.)

    Imports: $24 billion (f.o.b., 1998 est.)

    Imports—commodities: manufactures 75.3%, raw materials 9.0%, foodstuffs 7.8%, fuels 7.7%

    Imports—partners: Japan 20%, US 13%, Germany 9%, Singapore 9%, Australia 6.4%, South Korea 5.4%, Taiwan 3.4%, China 3.1% (1998 est.)

    Debt—external: $136 billion (yearend 1997 est.)

    Economic aid—recipient: $43 billion from IMF program and other official external financing (1997-2000)

    Currency: Indonesian rupiah (Rp)

    Exchange rates: Indonesian rupiahs (Rp) per US$1—8,714.3 (January 1999), 10,013.6 (1998), 2,909.4 (1997), 2,342.3 (1996), 2,248.6 (1995), 2,160.8 (1994)

    Fiscal year: 1 April—31 March

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Revised 1-Mar-99
Copyright © 1999 Photius Coutsoukis (all rights reserved)