ASIATODAY.ID, JAKARTA – The Organization for Economic Co-operation and Development (OECD) projects that Indonesia’s economic growth will only reach 4.9% in 2023.
The OECD in its latest report released on November 29 2023, reported that Indonesia’s economic growth this year increased to 4.9% from the previous report in September 2023 which was 4.7%. Then, for projections for next year, the OECD increased its projection to 5.2% from the previous report of 5.1%. Meanwhile, in 2025 it is also projected at 5.2%.
In the report, the OECD projects that Indonesia will maintain fast and stable economic growth. This performance was supported by better labor market conditions and lower inflation. Improvements in investor sentiment are also seen to support consumption and investment, thus offsetting the global trade picture which is considered gloomy.
Meanwhile, tourist arrivals and average spending are also assessed to continue to recover. Then, close coordination between fiscal and monetary policies is considered to have supported economic growth and resilience.
The impact of the six steps to increase policy interest rates carried out by Bank Indonesia previously is considered to be increasingly visible, with inflation now within the target range.
The OECD also mentioned Indonesia’s progress, regarding progress in diversifying products and export markets, especially through preferential trade agreements with other fast-growing partners.
However, Indonesia is also considered still vulnerable to external risks, especially in developing the domestic capital market. This includes geopolitical tensions in other regions. The reason is, geopolitical tensions have made global financial markets unpredictable. Non-tariff barriers also face Indonesia, on exports arising from partner regulations on deforestation and carbon limit adjustment levies.
Furthermore, regarding the risk of elections in February 2024, the OECD said that it is unlikely to change the overall economic policy stance.
Regarding fast trains, it is stated in the report that Indonesia is the fourth non-OECD country to have high-speed train services. However, in the medium term, the OECD assesses that an average annual growth rate of 5% may not be enough to transform Indonesia into a high-income country by 2045. (AT Network)
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