BI Optimistic That Indonesia's Economic Growth Will Grow Positively Until The First Semester Of 2024

Left to right, Head of BCA Economist David Sumual, Head of the Communication Department of Bank Indonesia Erwin Haryono and Director of the Department of Economic Policy and Monetary Juli Budi Winantya. (Aris-VOI)

SAMOSIR - Bank Indonesia (BI) is optimistic that Indonesia's economic growth in the first and second quarters of 2024 is expected to be higher than in the fourth quarter of 2023. This optimism is in line with the strong domestic demand from household consumption during Ramadan and Eid al-Fitr 1445 Hijri.

"We expect encouragement from domestic demand. Consumption is still strong even though historically it is relatively lower but there have been improvements," said Director of the Economic Policy Department of Bank Indonesia (BI) July Budi Winantya in a discussion on the Latest Economic Development and BI Policy Mix Response, in Samosir Regency, North Sumatra, Sunday, April 28.

On the other hand, July said that building investment itself is higher supported by continued demand for National Strategic Projects (PSN) in a number of areas and the development of private property as a positive impact of government incentives so that it will boost the economy in the future.

"Meanwhile, our building investment estimates that it will grow better so that it will boost the economy in the future," he said.

For information in 2024, BI projects that national economic growth will be in the range of 4.7 to 5.5 percent.

Juli said that although the current condition is amidst global uncertainty, due to the escalation of geopolitical tensions in the Middle East, the Indonesian economy is still relatively strong.

According to July, many global investors have moved their portfolio of assets to a safer place, especially US dollars and gold.

"This causes the escape of capital output and weakening of the exchange rate in developing countries to get bigger," he said.

As is known, Bank Indonesia (BI) decided to raise the benchmark interest rate or BI Rate by 25 basis points to 6.25 percent.

In addition, BI also raised the deposit facility interest rate and lending facility rate by 25 basis points, bringing it to 5.50 percent and 7.0 percent, respectively.

BI Governor Perry Warjiyo said he decided to raise the benchmark interest rate at the level of 6.25 percent as a prostability monetary consistency measure.

"The Meeting of the Board of Governors (RDG) of Bank Indonesia on April 23-24, 2024 decided to increase the BI-Rate by 25 basis points to 6.25 percent," Perry said at a press conference, Wednesday, April 24, 2024.

Perry menyampaikan Kenaikan suku bunga ini untuk memperkuat stabilitas nilai tukar Rupiah dari dampaknya risiko global serta sebagai langkah pre-emptive dan forward looking untuk memastikan inflasi tetap dalam sasaran 2,5 persen plus minus 1 persen pada 2024 dan 2025 sejalan dengan longan kebijakan moneter yang pro-stability.

Meanwhile, Perry said, macroprudential policies and payment systems remain pro-growth to support sustainable economic growth.

"Legal macroprudential policies continue to be pursued to encourage bank credit/financing to businesses and households," he said.

According to Perry, payment system policies are directed to strengthen the reliability of the payment system's infrastructure and industrial structure, as well as expand the acceptance of payment system digitization.

Perry said to maintain stability and support sustainable economic growth amid increasing uncertainty in global financial markets.

"Bank Indonesia continues to strengthen the mix of monetary, macroprudential, and payment systems to maintain stability and support sustainable economic growth," he concluded.