Indonesia had close to 5% GDP growth in 2000 and an inflation rate of slightly less than 10%.  This was a pleasant surprise to the country's economic pessimists, given the numerous demonstrations and conflicts in the provinces, frequent changes within the Government and continuing infighting between the various political parties sharing power across this vast archipelago.

The first quarter of 2001, however, has posed questions about the country's future economic progress because of the following indicators:

• Sharp depreciation in the currency (Rupiah) from 7,800 to over 10,000 to the US$.
• A slow-down in major export markets such as the USA and Japan.
• The International Monetary Fund, whilst scheduled to continue its support of economic recovery with more loans to Indonesia, has not reached agreement with the Government on a number of issues.  This is not assisting international investor confidence for the immediate future.
• These declining trends were also influenced by economic, social and political events within Indonesia.

Indonesia, whilst coping at present with these issues, has many other security, social, ethnic, good governance and KKN (corruption, collusion and nepotism) problems to solve relating to the previous Government's policies before the country will return to the prosperity and growth that was occurring until the economic crisis hit in late 1997.

The Government is still, however, confident of resolving its many and varied problems.  Whilst growth will be downgraded in 2001, Indonesia is still expecting GDP of between 2% and 3% for this fiscal year.

Indonesia has great economic prospects, but must address its myriad of problems to realise the potential that the country possesses.