Bad News From IMF, They Cut Indonesia's Economic Growth Projection Below The Government's Target

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JAKARTA - The International Monetary Fund (IMF) has corrected Indonesia's 2021 growth forecast to 3.2 percent. The cuts fell 0.7 percent compared to the previous projection in July of 3.9 percent.

This was stated by the IMF in the October 2021 edition of the World Economic Outlook report recently. The journal also stated that what was experienced by Indonesia was similar to the projected world economic growth in 2021 which decreased from 6.0 percent to 5.9 percent.

“The decline in this year's economic growth target occurred widely in both developed and developing countries. This shows that there is an increasing global risk,” said the IMF as quoted by the Ministry of Finance (Kemenkeu) on Wednesday, October 13.

Responding to this, Head of the Fiscal Policy Agency of the Ministry of Finance Febrio Kacaribu said that the IMF's revision of Indonesia's growth was also experienced by other ASEAN countries.

"Indonesia's projections are not as deep as corrections in other ASEAN-5 countries, namely Thailand 1.0 percent (down 1.1 points), Malaysia 3.5 percent (down 1.2 points), the Philippines 3.2 percent (down 2.2 points). points) and Vietnam 3.8 percent (down 2.7 points)," he said.

According to Febrio, this unfavorable situation was caused by several factors, such as vaccine inequality, the development of COVID-19 mutations, inflation risk, financial market volatility, and the decline in economic stimulus in various countries.

In addition, another risk that needs to be considered is the occurrence of global supply disruption which has the potential to trigger global stagflation, namely a condition in which high inflationary pressure occurs but is accompanied by weakening economic growth.

“The Indonesian government also continues to be aware of various global risks that occur. The pandemic is still the focus of our attention. Even though Indonesia has passed the peak of the COVID-19 wave due to the variant delta, the government continues to strive to improve its capabilities in handling the pandemic," he said.

Just so you know, the 3.2 percent prediction made by the IMF for Indonesia is below the level set by the government. However, the government itself is still optimistic if economic growth can be achieved according to the set target.

"By considering various factors, including the latest developments in economic indicators, the government sees Indonesia's growth outlook in 2021 in the range of 3.7 percent to 4.5 percent," said Febrio.