Two Factors Driving Indonesia's Economy In 2020 According To BI

JAKARTA - Governor of Bank Indonesia Perry Warjiyo said there are two factors driving Indonesia's economic growth in 2020, namely non-construction investment and exports which are predicted to increase this year.

Perry said that Bank Indonesia has projected that Indonesia's economic growth in 2020 will be in the range of 5.1 percent to 5.5 percent, but is more directed at the level of 5.3 percent.

"For 2020 we are at 5.1 percent to 5.5 percent but it may lead to 5.3 percent, mainly driven by investment, especially non-construction and then exports," he said in Jakarta, Monday, January 27.

Perry said that household consumption will still be one of the factors driving Indonesia's 2020 economic growth but not the main one like in 2019 because some special moments have been missed.

"This year it is lower (household consumption) because the election was only last year, so the 2020 growth pattern is driven by non-construction investment and exports," he said.

He stated that investment for this year will increase, namely between 5.4 percent to 5.8 percent, as well as exports which will increase in the range of 2.3 percent to 2.7 percent.

Perry explained that export growth was based on several factors, such as world economic growth which is projected to increase in 2020 at the level of 3.2 percent so that it can be a driving factor for exports.

"The world economic growth in 2018 was 3.6 percent, immediately dropped in 2019, our estimate is 2.9 percent, therefore our exports have decreased. But in 2020 we estimate world economic growth of 3.2 percent so that it can boost our exports, "he explained.

The next factor is related to global trade volume which will improve in 2020, namely 0.3 percent after in 2019 it has decreased to -0.2 percent, even though for 2018 it has increased by up to 3.4 percent.

"Below the volume of world trade in 2018 is 3.4 percent and in 2019 the forecast is for November to fall or -0.2 percent, but in 2020 it will improve by 0.3 percent," he said.

In addition, commodity prices, which for 2020 will be projected to grow by 2.1 percent after experiencing negative 3 percent in 2019, are also a driving factor for improving Indonesia's exports.

"Indeed, the largest is palm oil, which is about 17 percent of our estimate, then nickel the increase is approximately 12 percent," he said.

Perry said that although other commodity prices will experience a decline, they will not be as sharp as in 2019, so that they will still be able to drive export growth in 2020.

"At least there is an improvement in commodity prices so that higher growth, better commodity prices, and increased trade volume will boost our economic growth in terms of exports," he said.