Global Economy Full Of Uncertainty, Airlangga: The Indonesian Economy Will Exceed Projections

Coordinating Minister for the Economy Airlangga Hartarto (Photo: dock. Coordinating Ministry for the Economy)

JAKARTA - Coordinating Minister for Economic Affairs Airlangga Hartarto estimates that in the future for the remaining 2024 period, global economic conditions are estimated to still face uncertainty triggered by high interest rate policies, increasing geopolitical tension, and weakening global demand.

"However, based on the publication of the WEO IMF in April 2024, the national economy in 2024 is projected to remain resilient in the range of 5 percent and in 2025 it will increase and exceed the projected global economic growth and the average developing country," he explained in his official statement, Monday, May 6.

Airlangga said that as an effort to maintain economic growth, the Government has launched a number of strategies ranging from maintaining purchasing power and price stability through social assistance policies, DTP Properti VAT, controlled inflation with 4K.

As for other steps, such as maintaining the resilience of the external sector through optimizing the acceptance of DHE SDA and strengthening the implementation of LCT, to accelerating the performance of other sectoral policies through increasing added value by downstreaming and accelerating energy transition with Electric Vehicle (EV).

Airlangga said that in the first quarter of 2024, Indonesia's economic growth was able to grow by 5.11 percent (YoY). This figure recorded the highest growth in the first quarter since 2015.

"The solid economic growth in the First Quarter was also confirmed by various Rating Institutions which provided positive assessments that Indonesia's economic resilience was maintained, supported by high and stable economic growth," he said.

According to Airlangga, the achievement of national economic growth is also of higher quality, as reflected in labor data as of February 2024 which was also released today. The number of people working increased by 3.55 million people to 142.18 million people compared to February 2023.

Meanwhile, the number of unemployed decreased by 0.79 million people to 7.2 million people compared to February 2023.

Furthermore, the proportion of formal workers increased to 40.83 percent, higher than February 2023 at 39.88 percent, which was mainly driven by the increase in workers with labor status, employees, or employees who grew by 2.66 percent (YoY).

Meanwhile, in terms of expenditure, the high realization of various government spending, especially for Election spending, has encouraged Government Consumption to grow to 19.9 percent (YoY). This is also reflected in the consumption of Non-Professional Household Institutions (LNPRT) which grew up to 24.29 percent (YoY) due to election activities.

In addition, Airlangga conveyed that Household Consumption and Gross Fixed Capital Formation (PMTB) were still the highest sources of growth, even though they were in the middle of a negative export net.

"This condition shows that domestic demand is still strong and is supported by fiscal policy as a shock absorber in responding to the current condition of global uncertainty," he said.

With these various economic conditions, Airlangga said that Indonesia was able to become one of the countries that grew strongly and persistently was at a high level compared to a number of other countries such as Malaysia (3.9 percent), South Korea (3.4 percent), Singapore (2.7 percent), and Mexico (1.6 percent).

"The growth in the national economy is also accompanied by a low and controlled inflation rate of 3.0 percent or lower than a number of other countries such as India (4.9 percent), Brazil (3.9 percent), and the Philippines (3.7 percent)," he said.