Three Main Sectors Of Lesu, Economic Reform Needs To Be Matched

Illustration of the Indonesian Economy (Photo: Doc. Antara)

JAKARTA - Economic reform is needed to boost Indonesia's economic growth above 5 percent.

Senior Center of Strategic and International Studies (CSIS) researcher Haryo Aswicahyono stated, although Indonesia's economic growth is quite strong in 2022, the World Bank predicts Indonesia's economic growth in the following years to be slightly below 5 percent.

"Seeing the trend of economic growth from 2011 to 2022, there is a downward trend," he said quoting Antara, Jakarta, Monday, February 20.

Furthermore, it is said that there will be a weakening of three sources of Indonesia's economic growth in 2022, namely household consumption, investment, and exports.

Based on data, the trend of household consumption decreased from 5.49 percent in 2012, 5.04 percent in 2019 or before the COVID-19 pandemic, and decreased back to 4.93 percent in 2022.

"We are still recovering, we have not reached its peak, because for example in agriculture there is still a lot of unemployment," he said.

A sharp decline also occurred in investment from 9 percent in 2012, 4.45 percent in 2019 or before the pandemic, and decreased back to 4.39 percent in 2022.

Haryo considers the decline in investment to be quite worrying given the long-term decline in the economy towards key sources of growth.

Export growth actually improved from 2012 to 2021, but weakened slightly in 2022.

For the growth of the leading sector (the largest contribution to Gross Domestic Product/GDP), namely the manufacturing, trade and agricultural industries, also shows an unfavorable trend.

For example, there has been a structural or reallocation change from the agricultural sector which looks very weak, which has moved mainly to the service and manufacturing sectors.

The agricultural sector has low productivity and has moved to the service sector which is also low in productivity. Manufacturing has decreased, but services are almost always above manufacturing, which means that the change in structure does not support increased productivity. Unlike previous years, where manufacturing grew rapidly in the pre-pandemic era," said Haryo.