Upward Revision, Asian Development Bank Projects Indonesia's Economic Growth Of 5.2 Percent This Year

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JAKARTA - International institutions continue to show their optimism towards Indonesia's economic growth. After Fitch Ratings and Rating and Investment Information, Inc. (R&I), now it is the turn of the Asian Development Bank (ADB) which raises the projection of Indonesia's economic growth to 5.2 percent in 2022.

This projection is up from the previous ADB report which was only around 5 percent. In the Asian Development Outlook (ADO) Supplement, ADB assesses that Indonesia's economic growth will be supported by good domestic demand and stable export growth.

"Economic activity in Indonesia continues to return to normal, while COVID-19 infections are still under control, despite the recent increase in the number of cases," said ADB Director for Indonesia Jiro Tominaga in a statement quoted by Antara, Thursday, July 21.

The revised growth forecast in the ADO Supplement is also in line with the rising growth projections for Southeast Asia. For the region, ADB projects 5 percent growth in 2022, up from April's projection of 4.9 percent.

The report also estimates that inflation in Indonesia will be higher by 4 percent by the end of 2022 compared to ADB's projection of 3.6 percent in April 2022, due to high commodity prices.

"Inflation increases lower household purchasing power, but high prices for a number of key export commodities have benefited from export earnings and fiscal revenues, allowing the government to provide assistance amid rising food, electricity, and fuel prices, while still reducing the budget deficit," said Tominaga.

Meanwhile, for 2023, the ADB projects that the Indonesian economy will grow steadily at 5.3 percent and inflation may fall again in the range of 3.3 percent.