Economists Warn El Nino Inflation Peak Will Occur in Mid-2024

Head of Bank Permata economist Josua Pardede. (Photo: Doc. ANTARA)

JAKARTA – In the 2024 State Budget (APBN), the government targets Indonesia's economic growth at 5.2 percent.

Bank Permata Chief Economist Josua Pardede is optimistic about this target considering that global economic growth projections which are estimated by several world financial institutions, such as the World Bank, Organization for Economic Co-operation and Development (OECD), and the International Monetary Fund (IMF), will increase compared to with projections for the 2023 period.

"Indonesia's economic growth is estimated for next year to be quite convergent in the range of 4.9 to 5.1 percent," he said in a written statement, quoted Wednesday, September 27.

According to Josua, improving global economic growth is the basis for improving economic growth in various countries, especially developing countries, including Indonesia.

"So assuming that 5.2 percent can still be achieved. "At least household consumption growth should be at least 5 percent so that overall economic growth is above 5 percent," said Di.

Josua explained that consumption and investment will still be the main support for Indonesia's Gross Domestic Product (GDP). For this reason, Josua believes that the government needs to maintain people's purchasing power amidst rising global food commodity prices.

Apart from that, Josua also appreciated the inflation mitigation steps that have been taken by the government so that domestic inflation has increased relatively lower than in developed countries.

"The price inflation regulated by the government, which until now has been maintained relatively stable, will be able to keep the inflation rate below the 3 percent level," he said.

For information, the government is targeting inflation in 2024 at 2.8 percent. The government has also allocated a budget of IDR 108.8 trillion for food security in the 2024 APBN, consisting of central government spending of IDR 89.6 trillion and transfers to regions of IDR 19.2 trillion.

In the future, Josua sees that the El Nino phenomenon will be a challenge that will affect domestic inflation.

"Especially for rice, from the peak of El Nino, it will increase by 6 to 9 months. So there is a possibility that the inflation trend will peak in the middle of next year. "Because there is a time adjustment from the peak of El Nino to food inflation itself," concluded Josua.