Minister for National Development Planning Bambang Brodjonegoro sees Indonesia' economic growth rate will stagnate at the level of 5.3 percent in this year over the investment, exports and import development until June - Photo by President Office

JAKARTA (TheInsiderStories) – Minister of National Development Planning Bambang Brodjonegoro rated slowing economic growth in the second quarter (2Q) of 2019 became an early warning for the government. Yesterday, Statistics Indonesia reported Indonesia’ economic growth dropped to 5.05 percent compared to the same period of last year at 5.27 percent.

Its also lower than the first quarter (1Q) of 2019, 5.07 percent. The export performance recorded a deep contraction, which grew negatively by 1.81 percent in annual basis (YoY). The export performance has a significant effect on economic growth because of its contribution of 17.61 percent of GDP. Import performance also experienced negative growth of 6.73 percent. Its contribution to GDP was 18.53 percent.

Investment, which contributed 1.59 percent to GDP, experienced a significant slowdown, which only grew 5.01 percent. Far below the growth in the same period last year which amounted to 5.85 percent.

“Yes, this is an early warning. To be honest, it should be our concern. Therefore, the current third quarter of the export and investment sector is really a concern,” Brodjonegoro said at the Presidential Palace in Jakarta on Monday (05/08).

Especially, he added, the political situation post-election period has begun to stabilize, economic growth in the second half should be better and investment and export performance can develop. But the minister sees the growth until the end of 2019 will be at the level of 5.1 percent. He considers reaching the target at 5.2 percent will feel heavy.

Brodjonegoro said the challenges of the Indonesian economy going forward would not be easy. The reason is that not only Indonesia has experienced a slowdown in economic performance, but several other countries that have released data on economic growth have also experienced the same thing.

“The challenge ahead is not easy. If we look at the economic growth of other countries that have been released, it shows a slowdown. Next week many countries will be released and their predictions will also slow down,” said the minister.

He detailed, some of Indonesia’ main trading partners such as China which is the main export destination of the country recorded a slowdown in economic growth from 6.7 percent in the 2Q of 2018 to 6.2 percent in 2Q of 2019.

Then Singapore slowed down to 0.1 percent in 2Q of 2019 from the same period last year of 2.7 percent. Then, South Korea grew to 2.1 percent in 2Q of 2019, from 2.9 percent last year. Also, the United States whose economy slowed to 2.3 percent in2Q of 2019 from 3.2 percent in the same period last year.

The trade war, which was predicted to subside, added to the pressure on the Indonesian economy due to the expressions of the President of the United States that indicated he would re-apply import tariffs to China, he adds.

Whereas on the other hand, the minister said, Indonesia still had to face fundamental domestic challenges related to political stability, security, legal certainty, and trimming some bureaucracy that was not necessary for the sake of investment growth.

In the cabinet meeting at Merdeka Palace on Monday, President Joko Widodo said that until now the State Budget only contributed 14.5 percent of Indonesia’ gross domestic products (GDP). Therefore, he urged ministers to create a good ecosystem so that the private sector develops and can encourage investment and exports to grow.

According to him, in 2020 the global economy is still full of uncertainties. He hopes that the 2020′ State budget must be able to illustrate the strength and resilience of the national economy in the face of external turmoil. At the same time, it can show the direction of the Indonesian economy going forward.

“For this reason, what we hope is that the state budget as an instrument of acceleration of our competitiveness in investment and export. For human resources investment, it cannot be delayed any longer, so the stunting rate does not increase,” said the president in front of Vice President Jusuf Kalla and the ministers.

According to him, reforms in education and training are key. While related to research and education, Widodo hopes that the National Research Agency can be completed soon so that Indonesia is not left behind by the disruption of the developing economy at this time.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com