ASIATODAY.ID, JAKARTA – The world economy is projected to remain below the long-term trend, with downside risks including geopolitical tensions, geoeconomic fragmentation, strengthening of the dollar, high interest rates in developed countries, and fiscal tightening in developed countries. Even though global uncertainty is putting pressure on the domestic economy, the Indonesian economy has proven capable of growing above market expectations.
In Quarter I-2024, the Indonesian economy grew 5.11% (yoy), higher than Quarter I-2023 and Quarter IV-2023, which each amounted to 5.04% (yoy). Assessments from various international rating agencies also provide a positive assessment that Indonesia’s economic resilience is maintained, supported by high and stable economic growth.
“The World Bank has just raised Indonesia’s growth forecast for 2024 from 4.9% to 5.0% and for 2025 from 4.9% to 5.1%. “In the midst of the world economy experiencing high inflationary pressure, Indonesia’s inflation continues to be maintained within the target range of below 3%,” said the Coordinating Minister for the Indonesian Economy, Airlangga Hartarto at the Press Conference on Current Economic Fundamental Conditions and the Draft State Revenue and Expenditure Budget (RAPBN) 2025 at the Head Office of the Directorate General of Taxes, South Jakarta, Monday, June 24 2024.
Furthermore, Airlangga revealed that Indonesia’s real sector shows good economic prospects and is followed by Indonesia’s industrial activity and consumption which is still well maintained. Indonesia’s Manufacturing PMI level remained maintained at an expansive level for 33 consecutive months, followed by the Consumer Confidence Index remaining high and the Real Sales Index continuing to grow.
“Indonesia’s external sector remains strong, buffering against global pressures. “Indonesia’s Trade Balance (May 2024) remains in surplus at US$2.93 billion, and this surplus is 49 months in a row,” explained Airlangga.
The financial sector, which acts as an intermediary that supports economic fundamentals, also shows that banking credit growth in 2024 will be above 11% and is able to exceed the realization of 9-10% in 2023. Investment Credit and Working Capital also continue to experience growth as well as Investment Realization in January-March 2024 will experience an increase of 22.1% (yoy) and will reach IDR 401.5 trillion.
Furthermore, the Government through Bank Indonesia (BI) has also intervened to maintain the exchange rate through foreign exchange liquidity, foreign exchange reserves and the BI Rate.
Compared to other countries, Indonesia’s real yield is relatively attractive accompanied by moderate risk.
On this occasion, Minister of Finance Sri Mulyani Indrawati also explained that this activity was a form of government orchestration in order to provide clarity on the transition process, especially with regard to the State Revenue and Expenditure Budget (APBN).
Apart from giving the highest appreciation to the current Government, especially the Coordinating Minister for the Economy and the Minister of Finance, Thomas Djiwandono as the representative of the Synchronization Task Force Team on this occasion also emphasized that the Synchronization Team and the Government already have an understanding in allocating the budget to implement the next government programs. in 2025.
Furthermore, regarding economic growth for 2025, it is estimated that it will be in the range of 5.1% – 5.5%. This growth is mainly supported by household consumption with improvements in people’s purchasing power and investment which is expected to increase through the support of structural reforms.
“The fiscal deficit in the RAPBN is 2.29% – 2.82% of gross domestic product to support a healthy and sustainable APBN,” said Airlangga.
After the Covid-19 pandemic, Macro Fiscal performance continues to show good conditions. The tax ratio has consistently grown at double digits since 2022 and the fiscal deficit has been maintained below 3% of gross domestic product since 2022. The debt ratio has been maintained below 40% of gross domestic product and was followed by the Primary Balance in 2023 which returned to a surplus, where the last Primary Balance surplus occurred in 2011.
Indonesia’s Competitiveness Ranking in 2024 also experienced a significant increase, rising 7 places from 34th in 2023 to 27th in 2024. This improvement in ranking was driven by an increase in almost all constituent components, namely the Government Efficiency, Business Efficiency and Economic Performance components. However, the Government continues to anticipate various regional and global challenges through a number of strategic policies.
“From these indicators, we are optimistic that we can maintain the overall various ratios, including taxes, primary balance, budget deficit and debt,” concluded Airlangga. (ATN)
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