Regions and Countries

	Table of Contents
p. 12 of 15 BACK | NEXT Map Executive Summary I. Recent Economic Developments II. Short and Medium-Term Economic Prospects and Policy Issues A. Growth, Investment, and Saving B. Fiscal and Monetary Developments C. Balance of Payments D. Risks and Uncertainties III. Corruption as a Challenge to Development Appendix

Country Economic Review - Indonesia : II. Short and Medium-Term Economic Prospects and Policy Issues

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C. Balance of Payments

51. Exports are expected to recover A recovery in exports is anticipated to follow after the expected rebound in OECD economies rebound in 2002 and further in 2003. Indonesia's diverse natural resource-based exports stand to gain from increased consumer and business spending in international marketsplaces. Relatively high inflation may erode some of Indonesia's the present competitive position of Indonesia in non-oil exports, and ongoing changes in wage structures may dampen competitiveness in commodity-based exports further. It further remains to be seen if Indonesia can regain international buyer confidence, weakened by political problems in 2001. Imports will respond to recovering exports and investment in the near-short term, but perhaps also to renewed consumer confidence if political stability continues to firm. On balance, the current account will likely continue to fall, removing an important cushion that has shielded the economy from the impact of the the past few years of capital flight of the past few years. The need There thus will be an increasing urgency to complete address the unfinished reform agenda and move to change investor perceptions concerning the risks to commit capital in Indonesia is thus increasingly urgent.

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