Singapore (TheInsiderStories) — Moody’s Investors Service has revised downwards its GDP growth forecast for 16 economies in Asia Pacific, it in a newly released report. Of the 16, Hong Kong and Singapore have shown particularly weak expansions this year, with very large deteriorations in real GDP growth when compared to the first half of 2018.
Moody’s explains that externally-oriented economies saw a sharper slowing during the first six months (1H) of 2019, while domestic factors have had a greater influence on growth in Japan, India and the Philippines. The agency also points out that the weaker global economy has stunted Asian exports and the uncertain operating environment has weighed on investment.
In particular, softer capital formation has mirrored the weakening in exports, especially for trade-reliant economies such as Korea and Hong Kong. As for the Philippines, the delay in the passing of the government budget has disrupted its infrastructure buildout, while in Malaysia and Sri Lanka, fiscal tightening has posed drags.
And with India, the moderation in business sentiment and slow flow of credit to corporates have contributed to weaker investment in the country. Moody’s also says that the slower overall GDP growth in the region has not yet weighed significantly on broader employment conditions, while generally benign inflation supports purchasing power across Asia Pacific.
On Friday (08/23), Bank Indonesia (BI) Governor Perry Warjiyo projected that Indonesian economic growth will be below the midpoint of the 5 to 5.4 percent in 2019 and in the range of 5.1 – 5.5 percent in 2020. Beside government and public spending, investment and export become the engine of growth, he adds.
Indonesian President Joko Widodo has announced the country’ economic growth will be at 5.3 percent with consumption and investment as the main driving force. While, Finance Minister Sri Mulyani Indrawati sees Indonesian economy grow 5.2 percent in this year.
In 2020, the government set the inflation rate will be kept low at 3.1 percent to support public purchasing power. The Rupiah exchange rate is estimated to be in the range of Rp14,400 per US dollar, amidst external conditions that are still overshadowed by uncertainty.
The government believes that investment continues to flow into the country, due to positive perceptions above Indonesia and investment climate improvement. Accordingly, the 3-month Treasury bills interest rate is estimated at 5.4 percent.
Furthermore, the Indonesian crude oil price is estimated at around US$65 per barrel. With high sensitivity to various global dynamics, the Government continues to monitor global oil and commodity price movements, Widodo said.
It’s through optimizing the utilization of natural resources, including oil and gas. So oil and gas lifting target are assumed at 734 thousand barrels each and 1.19 million barrels of oil equivalent per day.
“The whole picture of the estimated macroeconomic indicators above is the basis for the preparation of the 2020 draft state budget,” the president said.
Widodo went on to say that next year, the Government will pursue three fiscal policy strategies, namely: mobilizing revenue while maintaining an investment climate, improving the quality of spending to be more effective in supporting priority programs, and finding sources financing carefully and efficiently through strengthening the role of quasi-fiscal.
“In line with this, the 2020 draft state budget policy is designed expansively, but it remains directed and measurable. This is a manifestation of the Government’s commitment to making the state budget more focused support priority activities while keeping the risks within safe limits,” he said.
In accordance with the 2020′ fiscal policy theme, the focus of the draft state budget is directed at five main things such as: strengthening the quality of human resources to create healthy, smart, skilled and prosperous human resources; acceleration of infrastructure development supporting economic transformation.
Then, strengthening social protection programs to respond to demographic challenges and anticipate aging populations; strengthening the quality of fiscal decentralization for encouraging regional independence. Also, anticipate global uncertainty.
Based on the character of an expansive but directed and measurable fiscal policy, President sai the 2020 budget deficit is planned to be 1.76 percent of GDP, or as much as Rp307.2 trillion (US$21.63 billion). State revenues and grants totaling Rp2,221.5 trillion, and state expenditures of Rp2,528.8 trillion.
State expenditure is planned to reach Rp2,528.8 trillion, or around 14.5 percent of GDP. The state expenditure will be used to improve the quality of human resources and continue social protection programs to address demographic challenges.
In addition, spending is also aimed at increasing investment and exports, through increasing competitiveness and productivity, accelerating infrastructure to improve connectivity and supporting economic transformation, and strengthening the quality of fiscal decentralization, said Widodo.
These various expenditures are expected to encourage the achievement of development targets by 2020, namely to reduce unemployment to 4.8 – 5.1 percent. Besides, poverty is expected to be reduced in the range of 8.5 – 9.0 percent and inequality decrease in the range of 0.375 to 0.380.
The government is also optimistic that human quality development can continue to be improved to reach the 72.51 indexes in 2020.
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