Finance Minister Sri Mulyani Indrawati addressed the statements during “Pathway to Prosperity Roundatable Breakfast,” at the Annual Meetings of IMF-World Bank Group in Bali - Photo by the Committee

Nusa Dua (TheInsiderStories) – Minister of Finance Sri Mulyani Indrawati still optimistic about the fate of Indonesia’s economic growth in 2018. She responded to the steps of the International Monetary Fund (IMF) which corrected the projected economic growth rate for Indonesia to 5.1 percent in 2018.

This figure is lower than their previous projection, which is 5.3 percent this year.

The minister said that the IMF certainly has a reason to reduce Indonesia’s growth projection figure this year, either from the side of demand or supply side. But she tried to remind that the domestic economic environment could not be affected by the dynamic global economic climate. Including an increase in the US Federal Reserves’s benchmark interest rate which led to weakening of the Rupiah.

However, she considered that the government already had anticipatory steps to face global risks. Including running policy mix between Bank Indonesia and the ministry of finance. She believes that the central bank’s response to the increase in US interest rates will be able to maintain a level of market interest to keep investing in Indonesia.

“Including the exchange rate, we also hope that imports will fall, exports will be good. If the response (market) is faster, it should be able to cancel,” she said.

Even so, Indrawati still chooses to wait for the response of the domestic industry to the global economic turmoil. But she believed the posture of the 2018 State budget are quite stable and does not experience a big deviation in state revenue and state expenditure.

The deficit is smaller than planned at 2.12 per cent of gross domestic product (GDP) or equivalent to Rp314 trillion (US$21.66 billion) from an assumption of 2.19 per cent of GDP or Rp325 trillion.

Indonesian government expected state revenue will reach 95-96 per cent of the target, while the deficit expected to lower than target.

In the latest World Economic Outlook released on Tuesday (09/10), the IMF also projected global economic growth this year to stagnate at 3.7 percent. The world’s largest economic institution also revised the 2019 global economic projection from 3.9 percent to 3.7 percent.

In addition, economic growth in developed countries, especially the United States and China, has also been corrected down. The IMF estimates the US economy will only grow 2.9 percent (2018) and 2.5 percent (2019), while China 6.6 percent (2018) and 6.2 percent (2019).

Otherwise, the US, which supports the fiscal package to increase interest rates, has experienced economic strengthening this year.