Despite Global Challenges, OECD and ADB Revise Up Projections for Indonesia’s 2023 Economic Growth
Before we take a look at the latest macroeconomic data from Indonesia, first there is some good news to share as both the Organization for Economic Cooperation and Development (OECD) and Asian Development Bank (ADB) decided to revise up their projections for the Indonesian economy in 2023.
Organization for Economic Cooperation and Development (OECD)
The OECD raised its outlook for economic growth of Indonesia in full-year 2023 from 4.7 percent year-on-year (y/y) to 4.9 percent (y/y) in its Economic Outlook Interim Report September 2023. This upgrade comes despite the OECD’s weak outlook for global economic growth. Problems noted by the OECD are the weaker-than-expected economic recovery in China, and central banks’ high interest rates. In fact, it expects global economic growth in 2024 to be lower than in 2023.
And while headline inflation has been declining around the world, core inflation has remained persistently high, driven by the services sector and the still relatively tight labor markets. This makes the OECD feel that inflation could continue to prove more persistent than anticipated, with further disruptions to energy and food markets still possible. Meanwhile, an even sharper slowdown in China’s economy would further drag on growth around the world. It also warns that public debt remains elevated in many countries.
Asian Development Bank
And the Asian Development Bank (ADB) holds a similar view in the September 2023 edition of its Asian Development Outlook. The ADB also detects global challenges as it notes that downside risks to the outlook strengthened while having revised down its projection for economic growth in Asia to 4.7 percent (y/y) in full-2023.
Weaknesses in China (particularly its property sector) are expected to drag down growth in the whole region. But low inflation in China is also what pulls down overall inflation expectations across the Asian region. The ADB projects an inflation rate in developing Asia of 3.6 percent (y/y) in 2023 (down from 4.4 percent y/y in 2022).
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