JAKARTA - Chief Economist and Investment of PT Manulife Aset Manajemen Indonesia Katarina Setiawan said there are five references that can determine the acceleration of Indonesia's economic recovery in 2021.
The first is in terms of monetary and fiscal policy. According to him, this segmentation held by the government is an important element in stimulating the economy.
"From the monetary side, we believe Bank Indonesia will maintain an accommodative stance by becoming a standby buyer in government bond auctions. Meanwhile, fiscal instruments will still provide support for the national economic recovery process with a commitment of PEN funds (national economic acceleration) of IDR 372 trillion or 2.3 percent of gross domestic product, ”he said in an online seminar, Thursday, January 14.
Furthermore, Katarina said the second reference was the government's efforts to maintain stable macroeconomic conditions through the procurement of vaccines. In his notes, the country targets to vaccinate 40.2 million people by April 2021. Then it will increase to 141 million people by the end of May 2021.
"Increasing people's confidence in the effectiveness of vaccines encourages people to do economic activities. If all this goes on, the economic wheels will certainly move, demand for credit will increase, so that the business world can increase the production of their goods and services, "he said.
Meanwhile, the third reference is the stable movement of the rupiah value. According to his analysis, the exchange rate will be maintained by taking into account the factor of the US dollar which is still weak due to the accommodative policy of the Fed, reduced current account pressure, low inflation, and corrected foreign ownership of Indonesia's financial assets.
"However, keep in mind, pressure from the current account is sloping due to declining imports. In line with the economic recovery, imports will definitely be running again because Indonesia needs capital goods for production activities, especially industry, "he said. If that happens, Katarina ensures that the trade deficit this year will be higher than in 2020.
Furthermore, the fourth is related to the application of the omnibus law. In this sensitive reference, Katarina sees an opportunity to increase the productivity of industry in the country. Because, this regulation is believed to increase Indonesia's competitiveness in attracting foreign investment into the country.
"Omnibus law has the potential to turn Indonesia into an important world chain. The accuracy of execution is very important in ensuring that the reform of the labor system and industry can be implemented properly, "he explained.
Then the last one is the question of the return of foreign portfolio funds which are expected to support and complement investment in the real sector.
"The latest news flow related to vaccines and the support of the government and central bank in boosting the economy during the pandemic have triggered a shift in sentiment towards emerging market financial markets, including Indonesia," said Katarina.
For this reason, the Manulife boss is optimistic that the domestic financial market can absorb foreign investment more strongly due to a number of accommodative policies.
"In the future, the potential for inflow is still open for Indonesia, given the relatively low foreign ownership in the stock and bond markets. Not to mention the yields that tend to be attractive compared to other mature countries, "Katarina concluded.
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