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BUECO5903 - Indonesia Economics Assignment

   

Added on  2020-03-04

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BUECO5903 - Indonesia Economics Assignment_1

Introduction Indonesia is a rising Asian giant which has been largely ignored by the international community but holds huge promise for the future based on the recent economic performance and rising political stability. The GDP of the nation is 9th largest in the worldon PPP basis and has witnessed rapid strides in the last decade or so. This is apparent from the fact that even at the height of the financial crisis in 2008-2009, Indonesia was the second fastest growing economy in the world placed only after China (Elias and Noone, 2011). The objective of the current paper is to critically analyse the country’s economic performance based on three key aspects namely production output, labour and price. A period of 10 years starting from 2004 onwards has been taken for consideration. Further, the report also aims to provide an outline of the key indicators along with the government initiatives in order to ensure robust performance across these three key aspects which are pivotal for sustainable growth.Production Output Performance Analysis In order to analyse the production output performance of the country, it is essential to discuss the major performance indicators which are highlighted below (Mankiw, 2012):GDPThe real gross domestic product (GDP) is the total of the market values of all the goods and services which are produced in the country at constant prices in a specified price time period. This specified time frame is generally the income year. GDP Growth RateFor a specified time period (mostly yearly or quarterly) the % change in the GDP at constant prices is termed as real GDP growth rate. It is considered to be a main performance indicator which is used in order to determine the economic growth rate of the country. GDP Per Capita 1
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The living standards of the residents of the respective country are generally measured based on the GDP per capita. The value of GDP per capita is determined as furnished below:GDPpercapita=RealGDPTotalNationalPopulationoftheCountryThe high value of GDP per capita is the indicator of the improvement of the living standards of the citizens of the country which then indicates the economic growth of the country (Hoover, 2012). GDP Growth RateFigure 1: INDONESIA GDP GROWTH RATE (2004-2013)Based on the above chart, it can be seen that for the ten years starting from year 2004 to 2013, the real GDP growth rate was in the excess of 4%. Further, the minimal value of 4.1% had been recorded at the end of year 2009. However, it can be noticed that there was not much effect of global financial crisis on the economy of Indonesia 2
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because the economic growth of the country is more dependent on the domestic demand. Therefore, GDP growth rate attracted high capital after the financial crisis. In ten periods, the maximum real GDP growth rate i.e. 7.2% had been recorded at the endof the financial year 2004 (Trading Economics, 2017).GDP Per CapitaFigure 2: INDONESIA GDP PER CAPITAL (2004-2013)It is apparent from the above highlighted GDP per capita trend that the living standards of the residents of Indonesia have kept on increasing. This fact is also supported from the growth of the real GDP of Indonesia which illustrates the growth of the population of Indonesia. Further, the lowest value of GDP per capita has been recorded in the year 2004 with a value of $ 2,420.58. This value had been reached a maximum value of $3,570.93 at the end of financial year 2013 (Trading Economics, 2017).Performance Trends of Indonesia 3
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