HSBC Projects Indonesia's Economic Growth to Reach 5.2 Percent in 2024

Illustration. (Photo: Freepic)

JAKARTA - HSBC estimates that Indonesia's economic growth will reach 5.2 percent in 2024, supported by, among other things, increased domestic consumption, continued infrastructure improvements, and investment developments.

"We estimate average gross domestic product (GDP) growth of 5.2 percent in 2024 compared to 5 percent in 2023," said HSBC Chief India and Indonesia Economist Pranjul Bhandari at the HSBC Asian Outlook 2024 press conference in Jakarta, quoted from Antara, Wednesday 17 January.

In 2024 the average core Consumer Price Index is estimated at 2.1 percent year on year (yoy). HSBC projections also show investment in Indonesia in 2024 growing 5.7 percent (yoy), higher than the estimate of 4.6 percent (yoy) in 2023.

Private consumption is also estimated to grow by 5.6 percent (yoy) in 2024, an increase compared to the projection of 5 percent in 2023. Likewise, government consumption is projected to increase to 6.1 percent (yoy) in 2024, higher than the estimate of 4.8 percent (yoy) in 2023.

HSBC estimates that Indonesia's nominal Gross Domestic Product (GDP) in 2024 will reach 1,450 billion US dollars, an increase compared to the estimate for 2023 of 1,386 billion US dollars. Meanwhile, Indonesia's GDP in 2022 is worth 1,319.10 billion US dollars.

"Indonesia has enjoyed stability in recent years, with inflation, the current account, and fiscal deficit all under control," said the economist.

In addition, real private sector credit growth is projected at 5.7 percent (yoy) in 2024, higher than the estimate for 2023 of 5.3 percent. The average exchange rate of the rupiah against the US dollar in 2024 is estimated at IDR 15,850 per US dollar.

Pranjul said that Indonesia is one of the countries whose economic growth is likely to be higher than the growth of the previous decade, in line with the increase in the manufacturing value chain starting from iron ore, to processed metals and electric vehicles.

"We estimate growth will accelerate by 0.5 ppt in the medium term, a sharp focus on macro stability will be at the heart of this," he said.

Bank credit growth appears overall, continuing to return to long-term averages, and could increase further if Bank Indonesia (Bl) lowers interest rates in 2024.

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There is also a large amount of foreign investment pending, which could materialize after the general elections (elections) are over.

US$30 billion worth of foreign investment has occurred in the refined metals sector over the past few years, with a similar amount pending, according to HSBC's analysis of foreign investment intentions.

Meanwhile, investment intentions of 45 billion US dollars have been announced in the field of electric vehicles, namely batteries and automotive.