JAKARTA (TheInsiderStories) – President Joko Widodo estimates that Indonesia’s economic value could reach US$ 2 trillion in the next 14 years, or by 2032.
As reflected by the nation’s Gross Domestic Product (GDP), this may be achieved if Indonesia’s economic growth is consistent at 5~6 per cent per year.
Indonesia’s nominal gross domestic product is figured at Rp 13,558 trillion, or $1 trillion at the 2017 exchange rate. This set Indonesia into a group of countries with economies reporting $1 trillion or more, like Australia, South Korea and India – what is widely known as the ‘Trillion Dollar Club’.
“Let’s say if the growth of 5-6 per cent per year means that the Indonesian economy will be double in the next 14 years or by 2032, our economy will rise to $ 2 trillion,” Widodo said on Tuesday (27/2).
In terms of GDP value, Widodo said Indonesia is ranked 16th in the world; he added that many are not aware that Indonesia possesses such great economic value.
Indonesia’s full-year gross domestic product growth last year accelerated at the fasted pace in four years, as robust exports and investment growth compensated for weak household consumption, according to Statistics Indonesia.
The agency said the economic growth rate was 5.07 per cent, the highest since 2014. In 2015, the economy grew only 4.88 per cent, while in 2016 it marked 5.03 per cent.
In 2017, Indonesia posted a five-year high trade surplus of $11.84 billion, thanks to a recovering global economy and rising commodity prices, with an increase in both exports and imports — 9.09 per cent and 8.06 per cent, respectively.
Foreign direct investment grew 8.5 per cent last year over the previous year.
As it is now stabilizing at a 5 per cent level, some analysts foresee private consumption picking up with upcoming regional elections and the Asian Games in mid-August.
The key to unlocking significantly accelerating economic growth is recovery of private consumption.
According to Bank Indonesia, the lower middle-class segment in particular is reluctant to spend their money.
They opine that a robust recovery in consumer confidence will drive Indonesia’s private consumption once again, moving forward.
However the government is also optimistic Indonesian economic growth will meet the government’s target of 5.4 per cent in 2018.
Government spending accelerated at 3.8 per cent YoY in 4Q. The Indonesian government has boosted spending on infrastructure across the archipelago as this development will trigger a multiplier effect and encourage structural economic growth and social progress.
The availability of infrastructure tends to improve the connectivity of urban and rural areas, which will eventually attract more private investment.
Jakarta is also committed to improving its investment climate through further deregulation. Going forward, infrastructure projects and robust investment growth are expected to continue supporting economic growth in 2018.
On the external front, both exports and imports were subdued in 4Q compared to the previous quarter.