Indonesia Economic Forecast of 2024 Amid Global Uncertainties

Bank Indonesia (BI) estimates Indonesia’s economic growth will still be affected by the global economy next year. BI projection puts Indonesia’s economic growth at most 5.5 percent in 2024.

Rinaldi Mohammad Azka

1 Jun 2023 - 02.07
Indonesia Economic Forecast of 2024 Amid Global Uncertainties

Illustration - Toll Road in Jakarta City/Bisnis/Photo credit: Jasa Marga

Bisnis, JAKARTA – Bank Indonesia (BI) estimate Indonesia’s economic growth at 4.7 to 5.5 percent in 2024. The government’s estimation is more optimistic with 5.3 to 5.7 percent of growth.

Bank Indonesia Governor Perry Warjiyo said the estimation takes into account the uncertainties of global conditions. BI estimates put global economic growth this year at 2.7 percent, and will slightly increase to 2.8 percent next year. The growth is mainly attributed to the improvement of economies in China, India, and other Asian countries.

“At the same time, developed countries are showing signs of stagnation. The United States [US] and Europe are still threatened with the risk of recession,” he said during a joint work meeting with the government and the House of Representatives Budget Committee on Tuesday (5/30/2023).

According to BI, the global inflation rate is indicating a downtrend, especially in developing countries, whereas developed countries will experience an even lower rate of inflation, which in turn will result in high-interest rates in developed countries.

Read Also: Core Inflation Climbing Despite Inflation in Downtrend

“Developed countries will experience a lower inflation rate due to manpower factors or supply issues, which in turn will maintain a higher level of interest rates,” he said.

Perry said that the global financial market is seeing increased risks, especially as many regional banks in the US close up shop, and negotiations of the debt limit in the US are still ongoing.

“These give rise to more risks in the global financial market and a much stronger dollar exchange rate toward currencies around the world, including the depreciation of euro and yen currencies. These also gained our attention in BI,” said Perry.

Read Also: Anticipating Reduction of BI Interest Rates During Perry Warjiyo’s Second Period

According to Perry, domestic economic growth is predicted to stay on an uptrend, mainly attributed to household consumption, government spending, and non-building investment. Estimates also say export will keep growing proportional to global demands.

“Overall, we estimate 2023’s economic growth at 4.5 to 5.2 percent and will increase to 4.7 to 5.5 percent in 2024,” said Perry. (Maria Elena)

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