Indonesian economic growth cools down

Featured - July 17th, 2012
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The world’s hottest emerging market seems to be cooling down, according to The Wall Street Journal. Investors worry that they might be walking on thin ice.

Indonesia’s economy saw its fastest annual expansion in 15 years at the start of the year, garnering an investment-grade credit rating from some rating firms. The country’s relatively low reliance on exports to the EU cushioned the economy against the latest global downturn. Analysts also said that Indonesia would fare much better than its Asian neighbors if the global slowdown worsens.

However, the rupiah declined steadily by 3% against the dollar over the past six months, more than double the decline of the Singapore dollar and Malaysian ringgit, the Journal reports. Stocks and government bonds also fell behind, while investors are growing restless over government and central bank policies that may restrict monetary pullouts in times of crisis. Indonesia is also vulnerable to falling commodity prices, warned economists. Asia’s overall slow growth is believed to be the effect of the global economic downturn.