the rupiah's exchange value dropped

Rupiah: On a downward trend for more than two years, the rupiah's exchange value dropped below 12,000 to the US dollar in November 2013, making it the year's worst performer among Asian currencies. The driving forces behind the Rupiah's depreciation to a four-year low were the worsening trade balance and asset sales by global portfolio investors fearing that the US Federal Reserve would soon begin to reduce quantitative easing. The weaker rupiah in turn stoked imported inflation by driving up the domestic cost of imported goods and materials. The current account deficit reinforced negative sentiment about Indonesia's currency to the extent that traders appeared to disregard repeated rate hikes and other countermeasures taken by the central bank. Approaching the end of 2013 however, a growing number of experts opined that the devaluation no longer fairly reflected the economic fundamentals, which gives rise to hope that the currency might regain some strength in 2013. That said, the government appears quite willing to accept a lower Rupiah as it seeks to bolster exports; it is therefore unlikely that the currency will return to its 2011 strength any time soon.

GDP: While still strong by global comparison, Indonesia's economy has gradually slowed over the past two years. By the third quarter of 2013, annual GDP growth had declined to 5.6%, down from 6.5% in 2011. The slowdown was at first largely owed to lower global prices for key Indonesian export commodities such as thermal coal, natural rubber, gold and crude palm oil, and more recently also to slowing investment and consumption. Net exports are set to remain subdued going into 2014 amid large stockpiles of rubber and coal in China. Investors will likely remain cautious ahead of presidential elections in July, while household spending – the core pillar of Indonesia's economy – is under the cosh as consumers fret about inflation. If downward pressure on the Rupiah persists, Bank Indonesia (BI) may be compelled to raise interest rates further in early 2014, which could hurt investment and consumption in the short run. On the bright side, public spending is set to buoy GDP in 2014, as the state budget plan foresees an increase of 6.7% over 2013, largely to boost infrastructure development. The second half of the year could see brighter prospects for both investment and household spending, as inflation is expected to come back down which would allow BI to relax its monetary policy. Assuming the world economy continues to strengthen, so should global commodity prices and hence Indonesian exports.

5W + 1 H

1. What happened to the economy of Indonesia?

the rupiah's exchange value dropped below 12,000 to the US dollar

2. Who is responsible for the decline in the rupiah?

because the government does not quickly take a policy

3. When the rupiah exchange value dropped below 12.000 to the US dollar/

in November 2013

4. Where this problem happen?

In indonesia

5. Why this problem happen?

because responsibility of the governnment does not quickly and Government is too complacent with the situation before

6. How can we do with problem like this

let us at the same evoke Indonesian economy and concerned about the future of our country, let's do away with the culture of corruption in Indonesia and at the same let us awaken the Indonesian economy for a better future

referensi

http://fahrulramadhan64.blogspot.com/2014/06/economic-problem-in-indonesia-2014.html