S&P Projects Indonesia's Economic Growth To Be Maintained By 5 Percent In The Next 3-4 Years

Governor of Bank Indonesia (BI) Perry Warjiyo. (Photo: Doc. Antara)

JAKARTA - The S&P rating agency projects that the average growth of Indonesia's economy over the next three to four years will be maintained at around 5 percent. This economic growth is driven by strong domestic demand, as well as increased government spending and private investment. "S&P views that the resilience of the external sector will be maintained in the medium term," said Bank Indonesia Governor (BI) Perry Warjiyo in Jakarta, quoted from Antara, Wednesday 31 July.Perry said that the performance of the external sector was supported by forecasts of export increases in line with the implementation of downstreaming policies amid weakening commodity prices. S&P also appreciated the commitment of the Indonesian Government to maintain inflation since 2010. The rating agency estimates that inflation in 2024-2025 will be in the target range of 2.5 percent plus one percent, respectively by 2.8 percent and 3 percent. In addition, the innovation of a pro-market operation strategy with the use of market-based instruments is considered to further increase the flexibility of monetary policy. In the fiscal sector, the rating institution views the Indonesian government as remaining committed to maintaining fiscal deficit below 3 percent of gross domestic product (GDP).

Secara umum, lembaga pemeringkat itu meyakini pemerintahan baru akan memperhatikan aspek keberlanjutan kebijakan untuk menjaga kredibilitas serta menghindari disrupsi ekonomi dan keuangan yang signifikan.

Previously, Bank Indonesia (BI) estimated that Indonesia's economic growth throughout 2024 was able to be in the range of 4.7 percent to 5.5 percent thanks to the performance of the domestic economy. "The 2024 economic growth is predicted to be in the range of 4.7 percent to 5.5 percent," said BI Governor Perry Warjiyo at a press conference on the results of the BI Board of Governors' Meeting (RDG) in Jakarta, Wednesday, July 17. He said household consumption and investment boosted the performance of gross domestic product (GDP) in the second quarter of 2024. Increased exports of goods were driven by increased exports of manufactured and mining products, especially metals and metal ore as well as steel, to major trading partner countries such as India and China. Based on business fields, economic growth is mainly supported by the manufacturing, construction, as well as wholesale and retail trade industries.