Analyses | 28 February 2005

Indonesia in a changing global environment

Indonesia faces a number of important challenges both in the short run and in the longer run. The world economy is currently growing robustly but a number of uncertainties cloud the economic outlook. A strong global economy is being challenged by higher oil prices. 

Warwick McKibbin

  • Warwick McKibbin

Indonesia faces a number of important challenges both in the short run and in the longer run. The world economy is currently growing robustly but a number of uncertainties cloud the economic outlook. A strong global economy is being challenged by higher oil prices. 

Warwick McKibbin

  • Warwick McKibbin
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Executive Summary

The emergence of significant trade imbalances between East Asia and the United States will undoubtedly put pressure of economic and political relations between the major regions of global growth. At the same time that the global economy is providing short term economic stimulus to Indonesia, there are a number of serious environmental problems that Indonesia needs to face. Key among these is depletion of natural resources, particularly the degradation of forests, and rising greenhouse gas emissions. As a major fossil fuel producer, global policies to reduce greenhouse gas emissions will impact directly on Indonesia. This paper explores these issues in assessing the outlook for Indonesia in coming years.