Indonesia Needs To Boost Industrial Sector Performance To Encourage Economic Growth

Illustration. (Photo: Doc. Antara)

JAKARTA - Main Economist of the Department of Economic Research and Regional Cooperation of the Asian Development Bank (ADB) Arief Ramayandi said Indonesia needs to boost the performance of the industrial sector to be a driver of economic growth in the future.

"The thing that can be done to encourage economic growth is to encourage industrial sector activities and also encourage the climate of competition in Indonesia to improve," Arief told reporters in Jakarta, quoted from Antara, Thursday, May 16.

ADB predicts that Indonesia will be able to maintain economic growth by 5 percent in 2024 and 2025. Household consumption will continue to be the main support for gross domestic product (GDP). However, export contributions are expected to be weak this year.

The weakening of exports is the result of the global economic turmoil, so that the impact is not only felt by Indonesia but also by various other countries.

Although still weakening, Arief assessed that export conditions had gone through crucial times and began to show recovery, although it was not sufficient to be a mainstay of GDP growth.

"Domestic demand will be a factor that encourages growth and eliminates the negative impact of net exports," he said.

Previously, the Central Statistics Agency (BPS) reported that Indonesia's economic growth in the first quarter of 2024 which was recorded at 5.11 percent year-on-year (yoy) to be the highest since 2015.

In terms of the amount of Gross Domestic Product (GDP) on the basis of Valid Prices, it was recorded at IDR 5,288.3 trillion, while GDP on a Constant Price basis reached IDR 3,112.9 trillion.

Secara sektoral, penyumbang utama ekonomi triwulan I-2024 dari sisi produksi berasal dari industri pengolahan, perdagangan, pergrid, konstruksi, serta pertambangan dan penggembangan.

The five sectors contributed positive economic growth with a total contribution of 63.61 percent to GDP.

Then in terms of expenditure, the main contributor to economic growth in the first quarter of 2024 comes from Household Consumption and Gross Fixed Capital Formation (PMTB). Household consumption and PMTB contributed the largest to GDP by 54.93 percent and 29.31 percent, respectively.

In the first quarter of 2024, household consumption became the highest source of Indonesia's economic growth, which was 2.62 percent.