Jakarta, Dec 21 (Antara) - The Indonesian economy, which is said to have had good momentum to grow higher at 5.17 percent this year, will continue to recover and perform better in 2018.
The Indonesian economy grew by an average of five percent during the past three years, while the World Bank has predicted that Indonesia's economy would reach 5.3 percent next year. Even, President Joko Widodo (Jokowi) has forecast that the country's economic growth could reach 5.4 percent next year.
"The Indonesian economy is showing a positive momentum, and it is quite strong. We will try to maintain the growth momentum, so that all components contributing to the growth can be maintained," Finance Minister Sri Mulyani Indrawati stated on Monday (Dec 4).
The government has earlier set a growth target of 5.1 percent in the 2017 State Budget but later increased to 5.2 percent in the 2017 Revised State Budget.
Bank Indonesia (BI/the central bank), however, estimated that the 5.2 percent target is unlikely to be achieved. According to Indrawati, the year-end growth projection is set at 5.17 percent, or 0.03 percent lower than that of the revised state budget for 2017. Yet, this figure is better than last year's growth a 5.02 percent.
Compared to last year, 2017 offers the necessary momentum for the Indonesian economy to grow higher, along with the global economic recovery, according to Indrawati.
Hence, the government is committed to maintaining the momentum for boosting the economic growth next year, she noted. "In 2018, we will maintain the momentum of growth recorded in 2017. The global economy is expected to pick up in 2017 as indicated by the volume of global trade, which rose four percent in 2017 as compared to 2.2 percent in 2016," she stated.
To maintain the momentum of growth, the government will make every effort by optimizing the management and use of the state budget for development purposes, among others, she noted.
According to World Bank Lead Economist for Indonesia, Frederico Gil Sander, Indonesia's economic growth is forecast to reach 5.3 percent in 2018, higher than the projection of 5.1 percent in 2017, supported by improving household consumption, investments, and exports.
"The economy will continue to improve, as the conducive external environment and domestic situation are positive," Sander stated in Jakarta on Thursday.
Sander noted that recovery in the growth of household consumption in the third quarter of 2017 will be higher in the next period, buoyed by strong commodity prices, low inflation, stable rupiah, good labor supply, and reduced borrowing costs.
In addition, investment growth will be supported by the inflow of foreign capital and the high absorption of government capital expenditure that can provide infrastructure facilities to invite investments from business players in the region.
The same optimism was also voiced by Jokowi, who predicted that the growth would reach 5.4 percent in 2018. He opined that Indonesia's economy has currently recorded a growth of over five percent per quarter in 2017, better than that recorded three years back when he started his term in office.
"Two months ago marked exactly three years of my leadership, and the current condition of the Indonesian economy is significantly better than that after the first year of my administration in 2015," he stated during his keynote speech at The Year Ahead Asia-Bloomberg in Mega Kuningan, South Jakarta, on Wednesday.
He noted that the government's efforts to implement structural reforms to boost economic performance have begun showing results. The improved condition of Indonesia's economy has allowed for greater fiscal space to initiate and finalize plans for all large infrastructure projects across the country.
"These positive developments are due to only one thing, which is reform," he pointed out, expressing his hope for the Indonesian economy to grow 5.4 percent in 2018. The figure is still below the target of seven percent set by Jokowi at the start of his administrative term.
Hence, the Indonesian government has continued to work hard on reforms, including cutting fuel subsidies, to create greater fiscal space in order to finance the construction of roads, railways, and ports.
In the meantime, exports have also begun to show better performance, according to the World Bank.
"Exports that increased throughout 2017, mainly of raw and processed commodities, such as coal and palm oil, helped to boost growth, as the exports of other manufacturing goods, such as textiles, footwear, and electrical goods, also recorded a high growth," Sander emphasized.
Nevertheless, risks exist that can disrupt the projected economic growth in 2018, such as household consumption that is slower than expected and commodity prices that have not fully recovered, and hence will affect the export performance.
Such risks stem from external factors, such as the normalization of monetary policy, heated geopolitical situation, and weakening of commodity prices and economic growth in China, which has been Indonesia's trading partner.
"A sharper-than-expected drop in the prices of commodities, such as coal, can significantly weaken trade and exert pressure on the balance of payments and tax revenues and hamper growth," Sander noted.
The Financial Service Authority (OJK) has predicted that Indonesia's economy would continue to recover in 2018. OJK official Bambang widjanarko told a seminar entitled "The Role of Financial Services Authority in Indonesian Economy" in Tangerang City of Banten, on Saturday, that the economic growth potential is supported by investment growth, especially through infrastructure development.
"Foreign investors' confidence in Indonesia's economic growth is also high, as reflected by the upgraded rating of Indonesia as a state-grade investment firm that previously ranked 41 to 36 (global competitiveness index) and was listed as a top improver based on the ease of doing business 2017," he concluded. ***3***(A014/INE)EDITED BY INE
(T.A014/A/BESSR/A. Abdussalam) 21-12-2017 23:56 |
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