Rodrigo A. Chaves, Chief Representative of the World Bank for Indonesia and Timor-Leste - Photo: World Bank Indonesia.

JAKARTA (TheInsiderStories) – Indonesia’s gross domestic product (GDP) growth was broadly stable at 5.1 percent in the first quarter (Q1) of 2019. The country has maintained a stable economic growth, which consistently remained within a narrow range of 4.9-5.3 percent for the last 14 quarters, according to the World Bank report issued today (07/7).

In 2018, it said, Indonesia’s coordinated and prudent macroeconomic policy framework underpinned steady economic growth, amid global volatility and several natural disasters. Real GDP growth strengthened to 5.2 percent (YoY) in 2018 from 5.1 percent in 2017.

Growth decelerated only slightly in Q1 2019, to 5.1 percent (YoY). The quarterly GDP growth has been broadly stable, remaining within a narrow range of 4.9-5.3 percent (YoY) for 14 consecutive quarters.

“Indonesia’s wise economic management has produced results. Although in 2018 capital outflows from emerging markets were greater than when the United States increased interest rates in 2013, Indonesia’s economy remained strong, helping to reduce the poverty rate to a record low of 9.7 percent in September 2018, ” said Rodrigo A. Chaves, Chief Representative of the World Bank for Indonesia and Timor-Leste.

“To accelerate growth from the current level, Indonesia needs more and more sustainable structural reforms, while maintaining robust fiscal and monetary policies,” he adds.

Drivers of the country’s economic growth shifted over the Q1 of 2019. Growth in fixed investment decelerated from multi-year highs, while both private and government consumption picked up.

This helped reduce the pressure on the large current account deficit in 2018, partly due to imports used for infrastructure and private investment.

Indonesia’s macro-financial conditions have improved since November 2018. Capital flows made a solid recovery from the global financial volatility of mid-2018 that saw larger capital outflows from emerging markets than during the taper tantrum of 2013.

With a relatively stable exchange rate, subdued oil prices, and stable domestic energy prices, inflation fell to an average of 2.6 percent in the Q1 of 2019, the lowest since the fourth quarter of 2009.

Indonesia’s GDP growth is projected at 5.1 percent in 2019 then recover to 5.2 percent in 2020. The modest acceleration in private consumption is expected to continue as inflation remains low and labor markets strong. The fiscal position is expected to improve, allowing government investment to strengthen as infrastructure projects recommence and post-disaster reconstruction begins.

In the midst of various global economic turmoil, the Indonesian economy has grown steadily, managed to maintain GDP growth of 4.9-5.1 percent, “said Frederico Gil Sander, World Bank Lead Economist.

“Capital flows are recovering in the first quarter of 2019. Despite the turmoil in capital flows, the Indonesian economy remains strong. This is a testimony that the fiscal and macro policies taken by the government are good,” he added.

Risks to Indonesia’s growth outlook have increased with re-escalating global trade tensions which will likely further weigh on world trade. In addition, slower global growth among developed economies and China also poses substantial risks.

This edition also highlights the importance of the maritime economy to Indonesia’s economic development and presents the challenges and opportunities the country faces in leveraging the maritime economy for greater prosperity.

Realizing the full potential of these sectors will require reforms that improve natural resource management, conserve ecosystems, improve seafood quality, enhance the tourist experience, and create opportunities to more strongly brand Indonesia’s marine and coastal assets. Also, investments to protect marine and coastal assets from marine debris.

“The Indonesian government has shown a strong commitment to make this country a global maritime power. Utilizing the full potential of Indonesia’s marine and coastal assets requires policies and investments to reduce plastic marine waste,” said Ann Jeannette Glauber, World Bank Practice Manager for Environment and Natural Resources.

It also needs to manage fisheries sustainably and protect coral reefs and coastal habitats to improve coastal livelihoods and enhance Indonesia’s image as a location for high-quality marine tourism.

“The Indonesian sea has great economic potential. Fisheries employ 7 million people, contributing $2.6 billion to GDP; coral reef tourism is worth $3.1 billion per year,” Sander said.

Indonesia, it said, not only needs to catch up with tourists but also needs to consider the level of shopping for tourists. Indonesia can increase revenue from coral reef tourism and income used for ecosystem conservation.

“Indonesia can get more benefits from the blue economy if the government carries out several policies to protect and manage natural assets,” he ended.

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