Sri Mulyani The Indonesian Economic Value Grows Strong Amid A Global Slowdown

Minister of Finance Sri Mulyani Indrawati said that in a global economic situation that was slowing and full of uncertainty, the Indonesian economy continued to grow strong and stable.

Despite departing from a high base in 2022, the Indonesian economy still managed to record strong growth of 5.04 percent (yoy) in the fourth quarter of 2023 and 5.05 percent for the entire year 2023.

Sri Mulyani conveyed that the APBN acts as a crucial absorber shock in maintaining people's purchasing power. The government responded timely to signs of a slowdown in the economy that occurred as a result of the global weakening in the third quarter of 2023, through a policy package issued by the Government at the beginning of the fourth quarter of 2023.

"Alhamdulillah, although in 2023 world economic growth is projected to slow down significantly, the Indonesian economy recorded a very good consistency of growth trends, supported by strong domestic demand activities, especially consumption and investment activities," Sri Mulyani said in a statement Wednesday, February 7.

Sri Mulyani explained that the economy also grew in quality. This is reflected in economic growth which has contributed to the decline in unemployment and poverty.

Economic recovery was able to create jobs that were able to reduce the open unemployment rate (TPT) to 5.32 percent in August 2023, down by 0.54 percent compared to August 2022. Strong economic activity has also boosted the poverty rate from 9.54 percent in March 2022 to 9.36 percent in 2023.

Public consumption as the main contributor to the economy grew 4.47 percent in the fourth quarter of 2023, or grew 4.82 percent throughout 2023.

The purchasing power of the people who are maintained with controlled inflation levels is one of the important factors in maintaining public consumption.

Consumption of Non-Profit Institutions Serving Households (LNPRT) jumped high, grew 18.11 percent in the fourth quarter of 2023, and 9.83 percent throughout 2023. This is closely related to the implementation of the 2024 General Election.

The issuance of Government Consumption (PKP) in the fourth quarter of 2023 again grew positively by 2.81 percent after contracting in the previous quarter. Thus, Government consumption throughout 2023 grew by 2.95 percent.

"The government policy package and optimal absorption of state spending will be able to encourage government consumption in the fourth quarter and provide direct benefits to the community. Optimal absorption of state spending also contributes to regional economic activity," he said.

Meanwhile, growth in Gross Fixed Capital Formation (PMTB) or investment was recorded at 5.02 percent in the fourth quarter of 2023 and 4.4 percent on an annual basis, an increase compared to 2022 which grew 3.9 percent.

Sri Mulyani said that the acceleration of the completion of the National Strategic Project, government capital expenditure activities, and the development of the capital city of Nusantara (IKN) maintains positive investment performance.

The private sector also contributed to encouraging investment in 2023 as shown by the realization of PMA and PMDN which were able to grow to reach double digits of 13.7 percent and 22.1 percent, respectively.

Increasing infrastructure conditions, excellent macroeconomic performance, and maintained socio-political stability are crucial factors to maintain the confidence of business actors to invest.

Meanwhile, real exports in the fourth quarter of 2023 grew 1.64 percent and 1.32 percent on an annual basis. The positive growth of exports in 2023 was mainly driven by the increase in exports of oil and gas goods and service exports in line with the increase in the number of foreign tourists.

Despite being faced with a slowdown in the world economy and a trend of commodity price moderation, non-oil and gas export volume grew 8.43 percent throughout 2023.

One of these growths comes from an increase in the volume of exports of iron and steel, especially the volume of ferronickel exports which grew to 47.6 percent.

In addition, an increase in export volume also occurred in vehicles and parts as well as mineral fuel. On the other hand, imports of goods in the fourth quarter of 2023 still contracted by 0.15 percent and 1.65 percent on an annual basis.