If There Is No Severe Wave Of COVID-19, The World Bank Predicts Indonesia's Economy Will Grow By 3.7 Percent In 2021

World Bank Chief Economist for Indonesia and Timor Leste Habib Rab at the Virtual Launch of Indonesia's Economic Prospects Report in Jakarta, Thursday (16/12/2021). (ANTARA/Agatha Olivia)

JAKARTA - The World Bank estimates that the Indonesian economy will grow 3.7 percent in 2021 and increase to 5.2 percent in 2022, assuming there are no other severe waves of COVID-19 and vaccination rates in Indonesia continue to be as high as they are today.

"We see that the economy will continue to recover by balancing various sources of growth," said the World Bank's Chief Economist for Indonesia and Timor Leste Habib Rab at the Virtual Launch of Indonesia's Economic Prospect Report in Jakarta, Thursday, December 16.

He explained that the high number of vaccinations would lead to a recovery in demand from the public and the private sector.

Regarding inflation, Habib also projects that the consumer price index will reach 1.6 percent this year, staying low enough because demand is still low and there are restrictions on inflation from producers to consumers.

"Indonesia can already be different from the global trend where inflation is soaring very high," he said as quoted by Antara.

Even so, he expects inflation to increase in the next few months, although it will still be at the level the government expects, so it is likely to be at the level of 2.2 percent in 2022.

With this positive outlook, there is still a lot of uncertainty and some risks of the long-term impact of COVID-19 for Indonesia.

Habib explained that the risks are an increase in unemployment, a decrease in investment, to a decrease in potential growth.

"Since 2010-2019 this has continued to decline and occurs not only in Indonesia, but also in other countries and it will decline much faster because of reduced investment," he concluded.