Consistent Indonesia Is Not Natural, Former Minister Of Finance Chatib Basri: Economic Growth Weak, But Not Negative

Economist and former Minister of Finance Chatib Basri. (Photo: Doc. Antara)

JAKARTA - Senior Economist Chatib Basri said Indonesia has a small potential to experience a recession with the value of Gross Domestic Product (GDP) decreasing in 2023.

"I don't see the possibility of Indonesia experiencing negative growth, maybe economic growth will weaken, but not negative," said Chatib Basril in the SOE International Conference quoted by Antara, Tuesday, October 18.

International institutions such as the Monetary Fund International or International Monetary Fund (IMF) previously only cut projections for Indonesia's economic growth from 5.2 percent on an annual basis to 5 percent in 2023.

"Perhaps in the worst case scenario, we will probably grow 4 percent on an annual basis under situations like this," he said.

Previously, he explained that Indonesia was smaller due to the global recession because its relationship with the global supply chain was still low, as can be seen from export donations to GDP which only reached 19.79 percent in the second quarter of 2022.

It is important to prepare for the worst potential, but optimism still needs to be maintained in a sustainable manner so that people are willing to spend their money. Because more than 50 percent of GDP contributed by public consumption.

Meanwhile, in 2023 the government will likely hold back the pace of state spending to pursue the target deficit in the State Revenue and Expenditure Budget (APBN) below 3 percent of Gross Domestic Product (GDP).

As for the banking sector, although still relatively healthy, Chatib Basri views the increase in the Minimum Mandatory Giro (GWM) to 9 percent could have an impact on small banks.

"They will see problems from tightening liquidity, then they will start to increase interest rates so that there is a price war between banks that has the potential to lead to instability that needs to be anticipated," he said.