Indonesian Economy Expected to Grow at Fastest Pace in 7 Years
Indonesian Economy Expected to Grow at Fastest Pace in 7 Years
(Bloomberg) --
Indonesia’s economy is projected to expand at its fastest pace in seven years in 2020, despite the deteriorating global outlook and rising risks of recession abroad.
The economy is forecast to grow 5.3% next year, according to assumptions approved by the Indonesian parliament Tuesday. Coming after the government twice revised down its growth forecast for this year, it would mark Indonesia’s fastest expansion since 2013.
“A prolonged and escalating trade war between the U.S. and China has created uncertainties that are becoming more unpredictable," Finance Minister Sri Mulyani Indrawati told lawmakers Tuesday during a parliamentary plenary session. The government’s fiscal policies are aimed at keeping the economy growing above 5% but realizing growth next year of 5.3% amid the global slowdown "will be quite challenging and will face downside risks," she said.
President Joko Widodo is set to boost spending to a record level to bolster growth in Southeast Asia’s largest economy, which faces risks from waning global demand and the U.S.-China trade war. Government spending will rise to 2,540.4 trillion rupiah ($180 billion) in 2020 while Jokowi, as the president is known, has pledged reforms aimed at attracting foreign investment and reversing a persistent trade deficit.
The parliament on Tuesday approved a budget deficit for next year of 1.76% of gross domestic product, lower than this year’s revised estimate of 1.93% and well within the legal limit of 3% of GDP. Inflation is expected to average 3.1% in 2020.
Indonesia’s economy grew 5.05% in the second quarter -- its slowest pace since mid-2017 -- and has been struggling to grow much faster than 5% for several years. The government has said the economy may expand 5.08%-5.11% this year, down from an initial forecast of 5.3%.
Key Numbers in 2020 Budget | |
|---|---|
| GDP | 5.3% |
| CPI | 3.1% |
| Budget deficit | 1.76% |
| Rupiah per dollar | 14,400 |
| Avg. 3-month T-bill | 5.4% |
| Avg. oil price/barrel | $63 |
| Oil lifting | 755,000 bbl/day |
| Gas lifting | 1.19m boepd |
To contact the reporters on this story: Viriya Singgih in Jakarta at vsinggih@bloomberg.net;Karlis Salna in Jakarta at ksalna@bloomberg.net
To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Michael S. Arnold
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