KSP: Indonesia's Economy Is In Good Condition Even Though The Global Situation Is Still Volatile

Main Expert Staff of the Presidential Staff Office Edy Priyono. (Photo: Doc. Antara)

JAKARTA - The Chief Expert of the Presidential Staff Office, Edy Priyono, assesses that the Indonesian economy is in good condition, although currently the global situation is still volatile.

Edy said that several economic indicators in early 2022 were still strong, which was reflected in the positive demand performance and production strength.​​​​​​​​​​​​​​​​​​​​​This is, consumer optimism for the economy is maintained, Edy said in a press release, quoted from Antara, Monday 9 May. .

The positive demand performance, said Edy, is reflected in the Consumer Confidence Index (IKK) which is at level 111 or the optimistic zone, and is shown by the retail sales index which grew 8.6 percent (yoy) in March 2022.

According to him, a fairly high growth in retail sales is important, considering that the main pillar of Indonesia's Gross Domestic Product (GDP) is household consumption.

"The positive trend of retail sales growth and the IKK is expected to support economic growth in the first quarter of 2022," he explained.

Meanwhile, in terms of production strength, continued Edy, it can be seen from the confidence of business managers in the Indonesian manufacturing sector, which is still in the expansion zone at the level of 51.3 in March 2022, and has consistently expanded for seven consecutive months.

In addition, positive performance on the production side can also be seen from the utilization of the processing industry, which is close to the pre-pandemic level, which was 72.45 percent in the first quarter of 2022.

"Thus the risk of future inflation can be minimized," he explained.

Edy conveyed the government's success in maintaining the stability of the Indonesian economy.

From the internal side, he stated, the government has succeeded in handling and controlling COVID-19, and restoring the national economy. Meanwhile, externally, he continued, Indonesia benefits from leading export commodities that provide fiscal support.

"This is evidenced by our foreign exchange reserves and the stability of the rupiah. Indonesia recorded a trade balance surplus for 23 consecutive months. The combination of these factors strengthened investor confidence in the Indonesian economy, so that foreign investment (FDI) in the first quarter of 2022 grew significantly by 31.8 percent. yeah," he explained.

Even so, continued Edy, Indonesia still has to be aware of the continued impact of transmission from the war, rising commodity prices, the COVID-19 pandemic in China, and the potential decline in global economic growth.

If this condition continues, said Edy, it will have an impact on increasing inflation, decreasing purchasing power, and putting pressure on the fiscal.

"Considering that the state budget must provide more social support for the community, and finally suppress the financial market through the weakening of the rupiah and increasing market interest rates," he said.

Facing this condition, the government has prepared various anticipatory steps. Among other things, diversifying export destinations and import sources and encouraging the use of the local currency settlement system (LCS) in export-import transactions, as well as encouraging efficiency and recovery in the processing industry.

"The government also strengthens socio-economic protection that is more targeted through subsidy reform and database reform," he explained.