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News Flash:

Indonesia’s Economy Returns to Pre-pandemic Levels

In a press statement after a cabinet meeting on finances and the 2023 state budget plan, Indonesian Finance Minister, Sri Mulyani Indrawati said that the Indonesian economy has returned to its pre-COVID-19 pandemic level according to reporting from Antara News and Tempo.

“The Indonesian economy has reached the pre-COVID-19 level as calculated from its GDP, both in 2021 and 2022. Meanwhile, the budget deficit is relatively moderate,” she said.

Statistics Indonesia’s data shows that the national economy based on GDP in Q2 2022 reached IDR 4,919.9-trillion, a growth of 5.44-percent compared to the same period last year.

In 2021, the figure was IDR 16,970.8-trillion, a growth of 3.69-percent, with a GDP per capita of IDR 62.2 million or USD 4,349.50.

Sri claimed the economic growth in Q2 2022 exceeded the government’s optimistic forecast of 5.2-percent. “This is an impressively high growth because last year’s growth in the second quarter was quite high at 7.1,” she added.

The government, she went on, is determined to maintain the economy at a good level. “The 2022 economy is already in a good position and must continue to be maintained in the second semester,” Sri said.

To support this, she reminded the President’s directive that asked all ministries and government agencies to realize government spending in 2022 by focusing on buying products that have high local content.

“This will support a stronger economic recovery in the third and fourth quarters when the world is experiencing turbulence,” Sri stated.

Meanwhile, Sri Mulyani has also gone on record as revealing that global economic growth is projected to weaken, due to an increasing risk of stagflation, uncertainty in global financial markets, inflationary pressures, and the geopolitical situation.

“Our global environment will weaken, while inflationary pressures will increase,” she said in a press statement after the Plenary Cabinet Session at the State Palace, Jakarta, Monday (08/08).

The Minister explained that the IMF lowered its global economic projection from 3.6-percent to 3.2-percent for 2022 and in 2023 it would be even weaker from 3.6-percent to 2.9-percent. Meanwhile, the IMF also predicts that inflation in developed countries in 2022 will rise to 6.6-percent and developing countries will be at the level of 9.5-percent.

“With the very high increase in inflation in developed countries, there was a reaction in terms of monetary policy and tightened liquidity. This spurred so-called capital outflows and volatility in the financial sector. This is what we must continue to manage domestically,” she said, suggesting this was a problem that must be overcome together with a combination of fiscal, monetary, and structural policies.

“We together with the Governor of Bank Indonesia will continue to formulate fiscal and monetary policies that are flexible, but also at the same time effective and credible,” she said.

 

Sources: Tempo, Antara News, The Ministry of Finance of The Republic of Indonesia

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