Indonesia's economic performancethrough mid-2011 has been positive. Solid growth has beenaccompanied by further portfolio capital and foreign directinvestment inflows. Public and financial sector balancesheets remain strong. However, events over the past quarterserve as a reminder of a number of Indonesia's ongoingpolicy challenges. At the same time, the launch of thegovernment's master plan 2011-2025 has focusedattention on the investments and policy reforms which canhelp Indonesia reach its future growth potential. Finally,heightened international risk aversion originating from theGreek debt crisis, and the potential market implications ofany haircut, were it to occur, are a reminder of theexternal shocks which could prompt reversals of short-termcapital flows to Indonesia. However, events over the pastquarter are a reminder of the current challenges which arefaced and the need to put in place, and implement, thepolicies and investments necessary for Indonesia to reachits potential as a leading global growth driver of the nextfew decades.