June 22, 2003

Indonesian Recovery?

Morgan Stanley sees signs that Indonesia's six years of recession and stagnation are over. This would be very good news indeed.

Morgan Stanley: ...Since Mrs. Megawati assumed the presidency in July 2001, her appointed economics management team has quite successfully executed the macro rehabilitation program laid down by the IMF.  This program in a nutshell includes fiscal consolidation and reforms (removing inefficient state subsidies for consumption and reining in the deficit) as well as administrative and political reform (regional autonomy and direct presidential elections to name two).

The macro result has been impressive.  There has been relative domestic demand resilience as well as good economic growth in the past two years despite the nasty external shocks and challenges posed by the terrorist attacks on the US, the Bali bombing, as well as the war in Iraq and the SARS outbreaks.  Inflation and interest rates have fallen dramatically and the rupiah has strengthened substantially.  In fact, Indonesia is the best performing global emerging market in the world thus far in 2003...

Posted by DeLong at June 22, 2003 10:31 AM | TrackBack

Comments

So Indonesia has taken one step back from oblivion. That is indeed good news. But we should hold our use of the term "impressive" until the day Indonesia has taken a few dozen steps back. Give me a break.

Posted by: Jim Harris on June 23, 2003 05:44 AM

I like it when you link to these country analyses from investment banks: I didn't even know that they put that kind of stuff on the web until I saw it on your weblog. But I am curious about one thing. What kind of track record do they have?

Posted by: Walt Pohl on June 24, 2003 08:50 AM
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