Indonesia Economy to Grow by 5.3% in 2017

The International Monetary Fund has forecast that Indonesia’s economy is set to grow by 5.3% in 2017—a relatively significant jump from the 4.9% economic growth rate forecasted for the fourth quarter of 2016.

“The jump in economic growth in 2017 is primarily driven by strong domestic demand,” said IMF’s Asia-Pacific Department Deputy Director, Kenneth Kang, at IMF Headquarters in Washington D.C., Antara reported.

Kang added that although Indonesia has managed to score good macroeconomic performance figures up until Q4 of 2016, exports are expected to remain comparatively low.

That said, Kang acknowledged that the Indonesian government has made significant headways when it comes to accelerating and increasing its investments on infrastructure projects, as well as the streamlining of its bureaucratic and regulatory red tapes—which includes the deregulation of foreign direct investments, which came into effect in May 2016.

Furthermore, added Kang, Indonesia’s monetary situation is relatively stable—aided by low inflation figures, decreasing output gap between budget and its realization, as well as the improving global economic outlook.

“As such, what Indonesia needs to do in the near future is to craft  more focused and inclusive policies that are aimed to sustain its high economic growth,” explained Kang, before adding that more pro-growth and investor-friendly policies are needed to ensure that the government could continue to accelerate the development of its infrastructure, as well as socioeconomic policies—especially those relating to education and public health.

By comparison, Indonesia’s economic growth forecast is relatively high among its Association of South East Asian Nations neighbors—with Malaysia and Thailand expected to grow at 4.6% and 3.3% in 2017, respectively.