ADB Lowers Indonesia’s Growth Forecast

According to the latest Asian Development Bank (ADB) assessment, Indonesia’s economy is expected to grow by 4.8-percent in 2023 and 5.0-percent in 2024, which is lower than the 5.3-percent growth recorded in 2022 report Vietnam Plus.

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, say Vietnam Plus.

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.

Source: Vietnam Plus

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