ADB lowers Indonesia’s growth forecast for 2023 and 2024. (Photo: thejakartapost.com)
According to the latest Asian Development Bank (ADB) assessment, Indonesia’s economy is expected to grow by 4.8% in 2023 and 5.0% in 2024.
ADB Country Director for Indonesia Jiro Tominaga said booming commodity exports drove growth to 5.3% in 2022, making up for modest domestic demand.
Countries like Indonesia that rely strongly on commodity exports benefited from high prices in 2022 as economies reopened following the COVID-19 pandemic and drove up demand for metals, fossil fuels and other commodities.
Meanwhile, tensions in Russian and Ukraine and other geopolitical developments disrupted the supply of some goods and also contributed to a rise in prices.
The director acknowledged that global headwinds in 2023 are projected to cut export growth, although the current account should continue to be close to balance. But because private consumption accounts for a large share of Indonesia’s economy, as consumer spending further normalises and benefits from the tapering off of inflation, this should put a floor on growth. Investment, however, is likely to remain modest as businesses wait-and-see.
Indonesia's GDP growth was well maintained last year, in stark contrast to the significant slowdown in many developed and some emerging economies, the Southeast Asian country has not been affected when the global inflation keep increasing.
Besides short-term, the ADB's report also highlighted the “medium- to long-term concerns with the loss of workers' income and children's in-person schooling during the pandemic that could depress potential growth rates.”./.