Macroeconomic data

The increase in GDP by 5.6% in 2005, compared to 5.1% in 2004, was mainly influenced, similarly to the year before, by an increase in capital accumulation – by 9.93%, and to a slightly lower degree of public sector consumption – by 8.06%. The impact of individual consumption on GDP growth was decreasing for another year in a row. In 2005, it amounted to only 3.95%, while the share of net exports in GDP growth was again negative (- 0.5%).

In 2005, the share of individual demand components in GDP was as follows: individual consumption – 65.4%, public sector consumption – 8.2%, accumulation – 22.0%, export of goods and services – 33.5%, import of goods and services – minus 29.2% (- 23.0%). 10 According to BPS estimates, on the supply side, production and services in the transport and communications sector grew the fastest (share in GDP growth – 0.8%) – by 13.0%, 'trade, hospitality and gastronomy’ (1.4 %) – by 8.6%, construction (0.5%) – by 7.3%, „financial and consulting services” (0.6%) – by 7.1%, „electricity and gas production and supply and water „(its share in GDP growth is small – 0.06%) – by 6.5%,” services „(0.5%) – 5.2%, manufacturing (1.3%) – by 4 , 6%, „agriculture, hunting and forestry” (0.4%) – by 2.5% and „mining and quarrying” (0.1%) – by 1.6%.

Gross domestic product per capita in 2005 amounted to USD 1.308. The Indonesian government predicts that in 2006 GDP growth will be slightly lower than assumed (6.2%) and will amount to 5.5 – 6.0%. Bank Indonesia’s forecasts are even more cautious – 5.0 – 5.7%, while the World Bank forecasts 5.5%. Generally, a „mirror reflection” of the state of the economy is expected in 2005, when quarterly growth fell from 6.1% in the first quarter to 4.9% in the fourth quarter. The results for the first quarter, when the economic growth amounted to 4.6% (preliminary data) partly confirm this thesis, although they may also mean that the growth in 2006 will not be higher than the World Bank forecast.

Annual inflation in 2005 amounted to 17.11% (data from Bank Indonesia), compared to 6.40% in 2004. Such a strong increase in inflation was mainly due to double increases in fuel prices. Increased official prices for tobacco products, water and tolls also had some impact on inflation. In the first months of 2006, inflationary pressure gradually decreased, thanks to which annual inflation at the end of April 2006 fell to 15.40%, still well above the forecasted by the end of the year by Bank Indonesia 7 – 9%.

Among the categories of goods in 2005, prices grew the fastest in the following items: transport and communication – by 44.75%, housing – by 13.94%, food – by 13.91%, processed food products, tobacco products and alcoholic beverages – by 13.71%, education and recreation – by 8.24%, clothing – by 6.92% and health care – by 6.13%. Interest rates in the first half of 2005 were gradually increased from 7.43% (interest rate on monthly Bank Indonesia certificates) at the end of 2004 to 8.25% at the end of June 2005. Decline of the rupee exchange rate against USD, followed by inflationary pressure as a result of the increase fuel prices, forced a much faster increase in interest rates – to 12.75% at the end of December 2005. The rate was maintained at the same level in the first 4 months of 2006.

After recording a positive balance of USD 309 million in 2004, 2005 closed with a negative balance of USD 385 million. A deficit balance was achieved despite a positive current account result of USD 2.996 billion (positive trade balance – USD 22.78 billion and a growing deficit in the balance of services – minus USD 19.788 billion, primarily in the oil and gas sector) and a high surplus in the account capital turnover of USD 6.3 billion 11 compared with only USD 2.6 billion in 2004.

Nadwyżka na rachunku obrotów kapitałowych jest sumą nadwyżki na rachunku obrotów sektora publicznego – plus 1,184 mld USD, osiągniętą głównie w wyniku moratorium Klubu Paryskiego, oraz nadwyżki na rachunku obrotów sektora prywatnego w wysokości 5,070 mld USD. Na nadwyżkę w sektorze prywatnym złożyły się pozytywne salda BIZ i inwestycji portfelowych oraz negatywne saldo w pozycji „pozostałe inwestycje”.

As a result of the negative balance of payments and intervention of Bank Indonesia to stabilize the rupee exchange rate to USD, Indonesia’s foreign reserves at the end of 2005 decreased compared to the end of December 2004 from USD 36.2 to 34.7 billion. The rapid increase in imports to Indonesia and the declining reserves meant that the ratio of import coverage with reserves decreased in 2005 to 4.4 months, from 5.6 months a year earlier. BI estimates that $ 18.7 billion is in the hands of the private sector compared to $ 13.4 billion a year earlier.