Indonesias Economy Remains Resilient Amid Global Challenges

Jakarta, INTI - Indonesia's economy has consistently grown at around 5% over the past eight quarters, despite various global economic challenges. In Q1 2024, Indonesia's economy grew by 5.11% year-on-year (yoy), and inflation in June 2024 was well within the target range at 2.5% (yoy).

“Where else do you see such growth and conditions globally? I think Indonesia ranks in the top three among G20 countries in terms of growth and inflation. And the government debt is also below 40%,” said Coordinating Minister for Economic Affairs Airlangga Hartarto in front of several local and foreign investors at the Macro Day Event organized by PT Verdhana Sekuritas Indonesia at Deutsche Building, Jakarta, Monday (22/07).

In the second half of 2024, the consumption sector will continue to be a strong driver of growth. Government policies on price stability and social protection programs will also support this growth. The real sector is also growing strongly, with Indonesia's Manufacturing Purchasing Managers' Index (PMI) expanding for 34 consecutive months and the external sector, namely the trade balance, showing a surplus for 50 consecutive months.

Macroeconomic fiscal performance, where the tax ratio has consistently grown by double digits since 2022, is accompanied by a fiscal deficit that remains under 3% of GDP post-Covid-19. Meanwhile, the financial sector, particularly credit growth and third-party funds (DPK), shows an increasing trend, with bank credit growth exceeding 11% this year.

Additionally, Indonesia has reached a significant milestone this year by moving up to 27th place from 34th in the global competitiveness rankings. All major rating agencies have also maintained Indonesia at an investment-grade level.

“One of our main drivers is infrastructure. Then business efficiency, government efficiency, and economic performance. One of the things we have strengthened is the labor market. And in the labor market, we are number two among all countries. That's because we introduced the Omnibus Law on Job Creation,” said Coordinating Minister Airlangga.

Furthermore, Coordinating Minister Airlangga outlined the vision of Indonesia Emas 2045, where Indonesia aims to achieve a nominal GDP of USD 9.8 trillion and be among the top five economies globally. This goal requires a transformative approach, focusing on science and technology, innovation, green economy, digital transformation, and economic integration.

“Here are the things we will continue to develop going forward: three growth engines. One is conventional, downstream processing. We have done a lot of downstream processing, including on nickel minerals. And also through infrastructure projects, national strategic projects. Then, of course, international cooperation and food security,” said Coordinating Minister Airlangga.

The government remains committed to supporting the broader technology and manufacturing sectors, including developing industries related to semiconductor components such as electric vehicle (EV) component production. Indonesia is also committed to emission reduction and energy transition initiatives, one of which is through the Asian Zero Emission Community (AZEC), which has provided funding for several projects in Indonesia, such as geothermal power plants, land conservation, and solar panels.

Indonesia is also leveraging its broad market and investment potential through participation in various international cooperation forums such as ASEAN, G20, Regional Comprehensive Economic Partnership (RCEP), Indo-Pacific Economic Framework (IPEF), Eurasia, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP), Indonesia's relations with the EU, and accession to become an OECD member.

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