Jokowi Seeks Spending Boost as Indonesia Targets Higher Growth

(Bloomberg) -- Go inside the global economy with Stephanie Flanders in her new podcast, Stephanomics. Subscribe via Pocket Cast or iTunes.

Indonesian President Joko Widodo called for an increase in capital spending to bolster growth as a slowing global economy, the U.S.-China trade war and rising oil prices pose risks to Southeast Asia’s largest economy.

Chairing the second cabinet meeting in two days, Widodo, who is on course for a second five-year term, laid out his budget priorities for next year. The president sought to boost investment and exports to sustain economic growth, while underscoring the importance of continuing the infrastructure drive that was a key plank of his first term and development of human resources as a “top priority.”

“We want to formulate a clear and measurable roadmap,” Widodo, known as Jokowi, told ministers at a cabinet meeting in Bogor on Tuesday. The president said infrastructure, including roads and water, still needs to be improved.

Jokowi is expected to be confirmed as having won a second five-year term when official results from the April 17 election are announced in the next few weeks. The president led his challenger Prabowo Subianto by about 10 percentage points after about 20 percent of votes were counted, according to election authorities, mirroring unofficial quick count results announced by private pollsters last week.

Exports Push

Indonesia’s economy has been growing at about 5 percent but well short of the 7 percent Jokowi targeted ahead of his first term five years ago. The government is now targeting growth of 5.3 percent to 5.6 percent next year, Finance Minister Sri Mulyani Indrawati told reporters following the cabinet meeting, after preliminary projections last month put the top of the range at 5.5 percent.

Read more on 2020 budget targets
  • Inflation seen at 2-4 percent range
  • Consumption growth seen at 5.2 percent
  • Investment growth 7.5 percent 
  • Exports growth seen at 7 percent; imports at 6 percent
  • Crude oil price seen $60-$70 per barrel range

Jokowi’s call for budgetary stimulus to support growth comes after Indonesia last year posted its worst trade deficit on record as the the U.S.-China trade war hurt its exports. While merchandise exports have fallen for five consecutive months, a slew of measures introduced in a bid to curb imports have started weighing on inbound shipments, helping the country post back-to-back trade surplus, official data show.

“Without an increase in investment and exports, don’t expect our economic growth to increase,” Jokowi said Tuesday.

Jokowi Seeks Spending Boost as Indonesia Targets Higher Growth

The president also ordered policy makers to keep a check on prices of staples, including food, ahead of the fasting month of Ramadan. While prices growth has been benign -- inflation eased to 2.48 percent in March to its lowest level since 2009 -- food prices can often soar ahead of Ramadan when households stock up for festive meals.

©2019 Bloomberg L.P.