Although the economy of Indonesia will continue to face challenges in 2017, there are a couple of matters that give rise to optimism about accelerating economic growth. These were the conclusions drawn at the Entrepreneur Networking Forum that was held by Bank Tabungan Negara Pensiunan Nasional in Bandung (West Java) on Wednesday (14/09). Although expectations were recently revised down (due to government budget cuts), Indonesian economic growth is still set to rebound in 2016 after having experienced several years of slowdown.

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On 11 September 2016, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve economy-related topics such as Indonesia's stocks and rupiah, looming revisions of the 2009 Mining Law, the G20 summit, GDP growth, the coal mining industry, corruption, the tax amnesty program, and more.

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The central government of Indonesia and Commission XI within Indonesia's House of Representatives (DPR) agreed to set the nation's economic growth target at 5.1 percent (y/y) in the draft state budget for 2017. This target is 0.2 percentage points below the GDP growth target that was mentioned by Indonesian President Joko Widodo in a speech last month (based on a financial note) and is also below the 5.2 GDP growth target that was set in the Revised 2016 State Budget. Less optimistic forecasts are especially caused by a cut in government spending.

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According to Indonesian Finance Minister Sri Mulyani Indrawati the economy of Indonesia will grow 5.1 percent (y/y) in 2016, slightly below the target that was set by the central government in the 2016 State Budget (5.2 percent y/y). This slightly less rosy view is caused by the decision to cut government spending by IDR 137.6 trillion (approx. USD $10.4 billion) this year in order to combat a widening budget deficit (that is mainly caused by weaker-than-targeted tax revenue). A cut in state spending means that the government has less funds to boost economic growth.

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At the latest policy meeting, Indonesia's central bank (Bank Indonesia) not only adopted a new benchmark monetary tool (the BI seven-day reverse repo rate) but also announced that it cut its forecast for economic growth in 2016. Earlier, Bank Indonesia estimated Indonesia's GDP growth in full-year 2016 in the range of 5.0 - 5.4 percent (y/y). However, it slightly cut its projection to the range of 4.9 - 5.3 percent (y/y) due to the government's decision to curtail expenditure by IDR 133.8 trillion (approx. USD $10.1 billion).

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After six years of steady decline, the Indonesian rupiah is likely to have appreciated against the US dollar at the end of 2016. So far this year, the currency of Indonesia has appreciated 4.8 percent to IDR 13,126 against the greenback (Bloomberg Dollar Index) supported by capital inflows, particularly into government bonds and stocks as well as the delay in further monetary tightening in the USA. Although the rupiah should depreciate a bit as we go towards the end of the year, it is set to finish the year at a stronger level than it started.

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On 7 August 2016, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve economic matters such as Indonesia's Q2-2016 GDP growth result, July inflation and manufacturing, the tax amnesty program, coal mining, monetary and fiscal policies, the tobacco industry, and much more.

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There is plenty of room for optimism about the direction of Indonesia's economic growth this year. Indonesia's Statistics Agency (BPS) announced on Friday (05/08) that the economy of Southeast Asia's largest economy expanded by 5.18 percent (y/y) in the second quarter of 2016, a figure that exceeded all expectations and forms a remarkable jump from the 4.66 percent (y/y) GDP growth figure in Q2-2015 and 4.91 percent (y/y) in Q1-2016. As a result, Indonesia's benchmark Jakarta Composite Index is currently near record levels.

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Indonesia's gross domestic product (GDP) grew 5.18 percent (y/y) in the second quarter of 2016, beating analysts' forecasts and accelerating strongly from the (downward revised) 4.91 percent (y/y) GDP growth pace that was recorded in the preceding quarter. Data from Indonesia's Statistics Agency (BPS), released this morning (05/08), also show that on a quarterly non-seasonally adjusted basis, Indonesia's GDP expanded by 4.02 percent in Q2-2016.

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In today's cabinet reshuffle (27/07) economist Sri Mulyani Indrawati was appointed as Indonesia's new finance minister, replacing Bambang Brodjonegoro. One day earlier, when few were aware about this surprise move, Sri Mulyani spoke briefly to reporters - in her position as managing director and chief operating officer of the World Bank - about the Indonesian and global economy. She sees two matters that negatively affect Indonesia's economic growth: slowing economic growth in China and the Brexit issue.

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What came as a surprise to us is that the Asian Development Bank (ADB) decided to raise its projection for Indonesia’s economic growth in full 2022 from 5.0 percent year-on-year (y/y) to 5.2 percent (y/y) in July 2022. This decision was substantiated in its Asian Development Outlook 2022 Supplement entitled Recovery Faces Diverse Challenges.

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Despite the ongoing challenges (that mainly originate from abroad), there is reason to be optimistic about Indonesia’s economic growth in 2022 as the COVID-19 threat has eased.

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On 7 February 2022, Indonesia’s Statistical Agency (Badan Pusat Statistik, or BPS) announced the latest gross domestic product (GDP) data of Indonesia, covering the final quarter of 2021.

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In the first month of 2022, we detected some positive signs, both abroad and at home (in Indonesia) as there is growing evidence that the Omicron variant is encouraging strong herd immunity around the world, while not making too many people ill to the extent that they require hospitalization.

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There are reasons to be optimistic about Indonesia’s economic activity in the fourth quarter of 2021. Obviously, the underlying reason being that new confirmed COVID-19 infections have not been far from zero in Indonesia throughout the final quarter of the year. As a consequence, the government of Indonesia did not need to impose tough restrictions, hence economic activity is allowed to blossom.

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The economic rebound in the second quarter of 2021 – with a +7.07 percent year-on-year (y/y) growth pace – was great for Indonesia, albeit it is obviously related to the ‘low base effect’ (as Indonesia had hit its rock bottom in the same quarter one year earlier). But what about the future, or more precisely: Q3-2021?

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August is always a cause for celebrations in Indonesia as the country commemorates its independence from the colonial Dutch regime every 17 August. This year, it was the 76th year Indonesians celebrated their Independence Day. Obviously, Indonesia Investments sends the warmest wishes for the country's continued prosperity and success to all Indonesians!

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As we have discussed in earlier reports and articles, the tourism industry is among the heaviest affected industries amid the COVID-19 crisis. Travel restrictions (such as mandatory COVID-19 tests and vaccines) and in some cases full travel bans set by governments across the world are discouraging people from traveling.

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It feels as if the world is, again, at a turning point. While there is a wide range of data that indicate improving economic conditions (both in Indonesia and the world as a whole), there also emerged room for concern.

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Right at the very start of July 2021, Indonesian President Joko Widodo announced ‘emergency measures’ (in Indonesian called Pemberlakukan Pembatasan Kegiatan Masyarakat Darurat, or PPKM Darurat, which roughly translates to the Enforcement of Restrictions on Activities in Society) in a renewed effort to combat the COVID-19 pandemic in Indonesia.

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