Government Sets Economic Growth Target Of 5.3 Percent In 2023, Bank Permata Economist: Needs Extra Work

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JAKARTA - The global economic slowdown in 2023 is also predicted to be felt in Indonesia, although the potential for a recession is small. Therefore, an economist from Bank Permata, Josua Pardede said, the government needs extra effort if it wants to achieve 5.3 percent growth next year.

"From the demand side, demand will decline, and the productive sector of the economy will still have quite a high challenge. So that in order to grow at a solid 5 percent, there may still be extra work from the government," said Joshua, Monday, November 7.

Joshua said the declining demand was from exports. Due to the decline in demand from major trading partners, namely the United States and Europe. Then the industrial sector began to feel the impact, for example, the textile sector, as well as sectors whose raw materials are imported or export-oriented.

Furthermore, Joshua said that some time ago, it was also known that the textile industry had carried out mass layoffs. The unemployment rate, Joshua said, was much lower at the start of the pandemic.

"It doesn't mean that if the global recession stops productivity, it might decrease but it won't be as worrying as during the pandemic. We see several sectors will be affected. But if he can implement efficiency and business strategies, of course, he will be able to limit (layoffs)," Joshua explained.

Previously, Coordinating Minister for Economic Affairs Airlangga Hartarto said the Indonesian economy was still good. It can be seen from the declining inflation. In fact, according to Airlangga, Indonesia and other Asian countries have resilience if a global recession occurs in 2023.

"Next year (2023) it could touch 5.3 percent," said Airlangga.

Then today, the Central Statistics Agency (BPS) released Indonesia's economic growth reaching 5.72 percent in the third quarter of the 2022 year on year. In the midst of uncertain global conditions, Indonesia is still considered to be able to maintain its economy.

Household consumption

Meanwhile, Executive Director of the Center for Indonesia Strategic Actions (CISA) Herry Menndrofa said Indonesia's economic growth in the third quarter of 2022 reached 5.72 percent, making Indonesia superior to China, the US and Europe.

"This is quite interesting, national economic growth is still projected well compared to other countries because of the government's preference for adaptive and productive policies," said Herry.

Herry mentioned the increase in fuel prices and the government's way of dealing with the impact that made Indonesia's economic performance still exist.

"The government is quite shrewd, even though fuel prices are rising. There are anticipatory efforts through the provision of subsidies in the form of BLT. This has an impact on the level of household consumption which is maintained," he said.

In addition, said Herry, Indonesia's export performance also contributed to a positive impact on Indonesia's economic growth, which increased in the third quarter.

"Indonesia's export performance as of September 2022 alone is at 20 percent per year. This means that there is a positive sentiment towards export activities that have an impact on economic growth," he said.

Herry said that this factor is also an important pillar of Indonesia's economic resilience when facing a global recession which is predicted to occur. Herry assessed that Indonesia will be able to face the storm of global recession when household consumption and export performance are maintained.

"The government must continue to maintain household consumption and export performance such as BLT subsidies, and MSME capital support," he said.

According to Herry, with the appointment of Indonesia as the host of the G-20, this is also a good momentum to increase the world's trust in Indonesia.

"The effect of Indonesia being the host of the G-20 is quite good, there is trust from other countries that is created which incidentally in this economic context is an important variable, including triggering the expansion of capital and investment in Indonesia," he said.