Shadowed By Uncertainty, BI Optimistic About National Economic Growth Of 5.8 Percent In 2021

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

JAKARTA - Bank Indonesia (BI) sees the national economy next year will recover significantly from this year. Even in the midst of uncertainty when the COVID-19 pandemic will end, BI believes the economy in 2021 can still grow by 5.8 percent.

Governor of Bank Indonesia Perry Warjiyo said that the forecast for Indonesia's economic recovery is getting better in 2021 due to the influence of the ongoing global fiscal and monetary stimulus.

"Insyaallah's economic recovery and investment next year can also be implemented by the Job Creation Law which is currently under discussion," he said at a joint meeting with Commission XI of the House of Representatives (DPR), Wednesday, September 2.

Perry said BI projected a slightly higher economic growth range than the government in the drafting of the 2021 national revenue and expenditure budget (RAPBN). The government projects 4.5 percent to 5.5 percent which is considered quite realistic.

Meanwhile, Perry continued, the government's projection is in line with BI's estimate of economic growth next year in the range of 4.8 to 5.8 percent. External stability is also projected to continue improving, starting from the Indonesian Balance of Payments (BOP) indicator, inflation, to rupiah stability.

"Indonesia's balance of payments in the second quarter also recorded a surplus. There was an improvement in the current account deficit which fell to 1.2 percent of GDP. Meanwhile, the capital account experienced a surplus so that overall Indonesia's balance of payments experienced a surplus," he said.

Then, the position of Indonesia's foreign exchange reserves at the end of July was also reported to have increased to 135.1 billion US dollars, making it above international adequacy standards. The rupiah exchange rate is relatively stable and controllable according to market mechanisms.

Furthermore, Perry said that the rupiah had strengthened by 13.82 percent since March 23, the peak of the economic impact due to the COVID-19 pandemic.

"Overall in 2021 we have the view that the government's assumption in the preparation of the 2021 State Budget is that the average rupiah exchange rate of Rp. 14,600 per US dollar is still in line with BI's estimate of around Rp. 13,900 to Rp.

Inflation indicators also continue to be in a safe zone. In fact, Perry said, it is below the 2021 inflation target range of 2 to 4 percent. In August 2020, the Central Bureau of Statistics reported a low annual deflation and inflation of 1.3 percent.

"Inflation remains low, among others, even though demand is increasing but production capacity can still be met, big harvest and the existence of BI policies and the central and regional governments," he said.