Raden Pardede, a senior advisor to Indonesia’s coordinating minister for economic affairs said the country could see positive economic growth next year. As a result, investment opportunities in the nation of more than 270 million might also increase.
Indonesia could see “robust economic recovery” in 2022 should the pandemic remain under control as the country sees an increasing rate of Covid-19 vaccinations and a low number of daily cases in recent weeks, according to Dr Raden Pardede.
The senior advisor to Airlangga Hartarto, Indonesia’s coordinating minister for economic affairs, said on the first day of the Indonesia Economic Forum 2021 on Tuesday (November 23) that the positive growth is projected based on “leading indicators” after the Delta variant swept across Indonesia in mid-2021.
Dr Raden, who also serves as the executive secretary of Indonesia’s Covid-19 Handling and National Economic Recovery Committee (KCP-PEN), said “the growing consumer optimism” is one of the factors leading to Indonesia’s economic recovery. In addition, the country’s Prompt Manufacturing Index is also increasing.
He added such confidence is “improving rapidly” thanks to how the government has put Covid-19 “under control”.
“This [has] already returned to the pre-pandemic [levels] … So this is why we see the optimism,” he said in the virtual forum.
“Spending [is] starting and consumption [is] increasing [again], as you know, the consumption accounts [for] 55% of the GDP,” he added.
Indonesia’s official Covid-19 data showed 365 cases on a 7-day case average per November 21. It was 99.45% lower than the record high 56,757 infections reported on July 15, the highest number since the country announced its first cases in March 2020.
Meanwhile, according to the Japanese publication Nikkei Asia, Indonesia’s Covid-19 Recovery Index is the highest in Southeast Asia per October 2021.
Dr Raden said the country’s economy could also “recover significantly” in the fourth quarter of 2021 and even beyond 2022 if the pandemic did not deteriorate further.
The nation’s economic growth projection is above 5% in the fourth quarter of this year and around 5.2% for 2022 year-on-year.
Dr Raden said that as the country’s Purchasing Managers’ Index increased, investments – comprising almost a third of the GDP – started to rise.
‘Better, flexible and responsible’
Dr Raden shared Indonesia’s macroeconomic policy framework for next year with the Indonesia Economic Forum 2021 participants.
In terms of fiscal policy, the Indonesian government will continue to have a “better, flexible and responsible” budget plan for 2022. Meanwhile, its monetary policy will be “complementary to fiscal policy”.
The government’s fiscal support for the National Economic Recovery Program in 2022 would be allocated for health worth 77.05 trillion rupiah (US$5.4 billion); priority programmes worth 90.04 trillion rupiah (US$6.3 billion);. social protections worth 126.54 trillion rupiah (US$8.8 billion); and support for MSMEs and corporations worth 27.48 trillion rupiah (US$1.9 billion).
The budgeting, however, would be flexible depending on future pandemic and economic conditions.
In 2021 alone, the country has so far allocated 744 trillion rupiah (US$52.1 billion) for such programs, “the biggest fiscal stimulus package in history”.
Dr Raden ended his session by hinting at the country’s upcoming economic transformation plans.
“Indonesia will continue to transform the economy to achieve more sustainable growth and job creation in a post-pandemic era,” he said.
