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Poverty and the Economy October 2012
The world commodity boom was a major factor in Indonesia’s growth from 2005 to 2011. Export earnings increased at a rate of 12% a year. This growth was dominated by commodities. Nearly three-quarters of the increase in commodity exports from 2005 to 2011 was due to increased prices, making Indonesia vulnerable to a downturn in world commodity prices. With slower growth in the world economy, the commodity boom ended in 2012 and most commodity price fell: palm oil & copper by 12%, coal, nickel, tin by 26-28%, rubber by 39%. As a result export earnings in the first 8 months of 2012 were 6% lower than the same period of 2011. Instead of increasing by US$ 46 billion, as they did from 2010 to 2011, export earnings are set to decline by $12 billion. This decline in export earnings will significantly contribute to slower growth in 2012. From January to August 2012 imports increased by 10.3% over the same period in 2011. Some of that increase in imports was in machinery imports as a result of increased investment, especially foreign private investment, and should lead to more rapid growth in the future
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