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2010 OECD Economic Surveys: Indonesia 2010

image of OECD Economic Surveys: Indonesia 2010

This 2010 edition of OECD's periodic survey of the Indonesian economy includes chapters covering achieving sustainable and inclusive growth, phasing out energy subsidies, tackling the infrastructure challenge, and enhancing the effectiveness of social policies. It finds that Indonesia's economy withstood the recent global crisis very well, thanks to appropriate stabilisation policies and increased economic and financial resilience.  Nevertheless, a number of institutional reforms and policy changes will be needed to deal with the several cross-cutting challenges of decentralisation, capacity-building at the local level, and improved economic governance.

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Achieving sustainable and inclusive growth

Indonesia’s economic performance in 2009-10 has been impressive. The country has come out of the global crisis relatively unscathed when compared both with previous episodes of economic distress and with other emerging markets. Appropriate macroeconomic management, a low exposure of financial markets to toxic assets and a high reliance on domestic demand, rather than on international trade, explain this strong performance. Macroeconomic and structural reforms have also improved the country’s capacity to withstand adverse economic shocks. But progress have been more rapid in some areas than in others, and potential output growth is expected to slow in the coming decade, when the effects of population ageing will begin to kick in. Over the long term, reforms will be needed to realise the government’s economic growth targets, as set out in its Medium Term Development Plan (Rencana Pembanginan Jangka Menengah Nasional, RPJMN), and to speed up economic progress.

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