Coordinating minister for economic affairs Darmin Nasution sees Indonesian economic growth will ended at 5.1 percent of gross domestic products in this year - Photo by President Office

JAKARTA (TheInsiderStories) – Coordinating minister for economic affairs Darmin Nasution sees Indonesian economic growth will ended at 5.1 percent of gross domestic products (GDP) in this year. Initially, the government targeting the growth at 5.3 percent of GDP.

“We estimate the GDP 5.1 percent more driven by domestic (consumption) because our export imports are not as big as Thailand and Malaysia,” said the senior minister on Monday (10/14).

While, minister of finance, Sri Mulyani Indrawati, is still confident that economic growth in the third quarter of 2019 around 5 percent, although Indonesia is in the midst of global economic pressure and uncertainty. Overall, she forecast the economic growth to reach 5.08 percent in 2019.

According to her, in the last two quarters of this year Indonesia’ economic growth will be determined by the value of investment. In addition, export performance is still quite heavy this year.

“What we should look at is whether investment will still be at the 5 percent level, and the dynamics of export and import,” she told reporters in Jakarta, on Monday.

The minister also noted, the household consumption is considered to be the main driver of the domestic economy. Therefore, government will control the food prices to drive the public consumption.

“We expect its consumption position confidence index from consumers to be quite strong. So we hope it will be maintained at 5 percent,” she concluded.

Recently, World Bank sees, Indonesia and other Southeast Asian (ASEAN) countries are well-positioned to generate ongoing economic growth. Lead Economist, Frederico Gil Sander, said stable economic demand fueling the economic performances of the countries in the region amid the external challenges.

“We are confident of the strength of Indonesia’ economic fundamentals to weather global and domestic uncertainties so as to overcome the complicated political pressure in the first half (1H) and bright prospects until the end of the year,” he noted.

According to Sander, ASEAN was seeing positive economic prospects, with the opportunities expected to come from continuing resilience in the domestic market as supported by favorable demographics, continuing investment in infrastructure and a healthy macro balance sheet thanks to lower and manageable leveraging.

He explained how the world was currently facing volatility, uncertainty, complexity, and ambiguity. He said global economic moderation, which had started in the second half of 2018, was showing signs of a continuing trend toward early 2019.

Explaining factors contributing to global economic volatility, Sander said interest rate hikes globally, spearheaded by monetary policy moderation by the United States (US) Federal Reserve, have led to the rising cost of the economy.

“Starting in late 2018, we are seeing global and regional trade slowing down as a fall-out of the escalation in the US-China trade war. We’ll see rising political risks and policy uncertainties from US domestic political and fiscal gridlocks post-mid-term election, Brexit, geopolitical issues, as well as elections,” said the economist.

While, chief economist of PT Bank Mandiri Tbk, Andry Asmoro and board of experts of Indonesia Merchant Association Yongky Susilo shared Sander’ insight into Indonesia’ positive economic prospects.

“Looking at the monetary policy, we’ll see Indonesia having far better economic prospects for 2019 when compared to 2013 and 2018,” said Asmoro.

However, the challenge that Indonesia is expected to face is the economic slowdown experienced by China. The trade war has reportedly led to China’s economic slowdown. Its economic growth was recorded at 6.6 percent last year, a drop of 6.9 percent from 2017.

While Susilo said Indonesia was expected to see gross domestic product growth of 5.3 percent this year, an increase of 5.17 percent from last year. He also highlighted the government’s efforts to boost investment by issuing finance minister regulation on the tax holiday, which replaced the early regulation.

“Indonesia remains an attractive destination for FDI, mostly due to its large domestic market and relative political stability. On the other hand, the regulatory and legal environment remains difficult and complex and both are frequently cited as a source of concern for investors,” said the expert.

Some of the difficulties, he cited, were in regard to the patent law, local-content restrictions, import quotas, and work permits. In addition, investors expressed hope that more sectors would be opened to foreign ownership through the revision of the negative investment list.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com