IMF Raises Indonesia's 2023 Economic Growth Projection to 5%
Friday, 14 April 2023
JAKARTA. The International Monetary Fund (IMF) raised the outlook for Indonesia's economic growth in 2023 to 5% and 5.1% in 2024.
Quoting Katadata.co.id, this is as stated in the April 2023 edition of the IMF's World Economic Outlook (WEO) Report which turned out to be higher than the outlook issued previously in January 2023, which was 4.8%.
However, the latest IMF projection is still lower than the realization of economic growth in 2022 of 5.3%.
While referring to Kontan.co.id, the reason the IMF boosted Indonesia's economic growth projection was that it was supported by better trade activities. This is because there is an economic opening in China, which is the main trading partner of Indonesia and other countries.
The economic opening of China is a piece of good news when other major countries such as the United States and Europe will face an economic slowdown this year.
Nevertheless, the IMF noted that Indonesia's domestic demand will weaken. However, the prospect of an increase in international trade will cover it.
Furthermore, the IMF also considers Indonesia's economic achievements to be quite good in 2022, supported by high domestic demand, as well as external demand and rising commodity prices.
Government Response
Meanwhile, the government, the increase in the projected economic growth is in line with the current economic conditions as indicated by the Purchasing Managers Index (PMI) of Indonesia Manufacturing.
Until March 2023, Indonesia's Manufacturing PMI was at an expansive level for 19 consecutive months. This condition contrasts with the Global Manufacturing PMI which is still at a contractionary level.
In addition, the index of retail sales and consumer confidence in Indonesia is still high indicating that Indonesia's consumption level is well maintained. Meanwhile, Indonesia's inflation is still relatively moderate at 5.0% year on year.
Not only that, Indonesia's trade balance has also experienced a surplus for 35 consecutive months. (ASP/KEN)
