|Economic growth has continued to slow as investment and exports have softened, although household consumption is holding up. The current account has widened again, and the rupiah has depreciated significantly as a result. Growth is projected to remain moderate through 2015 before picking up somewhat in 2016, due largely to an acceleration in investment and firming consumption.
The recent second round of cuts in fuel subsidies will lift headline inflation, but core measures should remain well anchored, and the next move in interest rates should be downwards. The fiscal space created by the fuel subsidy cut should be directed toward lifting spending on infrastructure, education and health care.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.