Indonesia Predicts Bright Outlook This Year

Many have predicted that while the global economic environment will remain uncertain in 2017 Indonesia’s economic growth next year will be higher than in 2016.

In 2016, national economic growth was initially set at 5.3% and later revised downward to 5.1% due to the economic downturn. By contrast, the target for 2017 has been set at 5.1% yet growth could reach 5.3%, Antara news agency reported.

The National Development Planning Agency, or Bappenas, has predicted that Indonesia’s economy will grow by 5.3% in 2017.

“Yes, for economic growth in 2017, I have predicted a range of 5.1 to 5.3%,” Minister of National Development Planning and Head of Bappenas Bambang Permadi Soemantri Brodjonegoro said during a discussion on the “2016 Year-End Final Evaluation and Outlook 2017” in the Bappenas office on Saturday.

Several institutions have forecast higher growth. The World Bank, for example, has predicted that Indonesia’s economy will grow by 5.3% next year, while the Asian Development Bank, the Bloomberg Consensus Forecast, S&P, Fitch, and Moody’s have estimated growth at 5.1%, 5.3%, 5.2%, 5.5%, and 5.2%, respectively.

According to Bambang, his estimate is based on the assumption that the economy will still be dominated by consumption, particularly as the impact of the global economic turmoil on the domestic economy is as yet uncertain.

The global economic uncertainty is expected to linger in 2017 and affect Indonesia’s economy, yet analysts say it is in a relatively stronger position to face global challenges this year. However, measures to ensure that the national economy adapts to global change are important to lift growth.

In setting its economic assumptions for 2017, the government has adopted moderate steps, Finance Minister Sri Mulyani Indrawati said, keeping in mind the likely global economic scenario next year.

The government has set a target of 5.1%, relatively lower than estimates by many other institutions. However, Mulyani argues that the 5.1% figure does not reflect any pessimism but optimism combined with prudence.

The government’s prediction of 5.1% growth reflects a balance between optimism and pragmatism. “There is optimism because we are convinced we will be able to maintain the momentum. We balanced it with some prudence because there are external or even internal challenges that we will have to face,” Mulyani said.