Indonesia, which is also Southeast Asia’s largest economy has shown resistance in the face of pandemic challenges, with economic growth returning to a robust 5% trajectory
The Parliament of Indonesia passed the $216 billion budget for the year 2024 which will help the president boost the development projects in the final year of his tenure. After holding a plenary meeting on Thursday, the policymakers passed the budget into law, with next year’s state spending seen higher at 3,325 trillion rupiah. This amount is also aimed at supporting an economic growth target of 5.2%. The budget shortfall on the other hand is set at 2.29% of GDP.
The mentioned goals also match the fiscal deficit targets and gross domestic product growth for this year. The estimates had been lowered from the ones set at the budget of 2023. Indonesian President Jokowi last month set a modest growth outlook for the upcoming year. The GDP is anticipated to grow 5.2% in 2024 according to the president’s annual budget speech. The initial estimate was between 5.1% – 5.7%. The estimates about the fiscal deficit fall perfectly according to the government’s outlook for this year’s shortfall at 2.28%, lower than the figure presented in the 2023 budget.
Indonesia, which is also Southeast Asia’s largest economy has shown resistance in the face of pandemic challenges, with economic growth returning to a robust 5% trajectory. Despite facing higher interest rates and a slump in exports, the nation achieved a 5.2% GDP expansion in the last quarter. The performance is set to outpace most of its regional peers, although it is not without challenges, with cracks appearing in both exports and household consumption.
One notable factor contributing to Indonesia’s economic stability is the government’s decision to increase its price assumption for crude oil. Previously estimated at $80 per barrel, this assumption has been raised to $82 per barrel for the coming year, a response to the mounting global costs in the energy sector.
As President Joko Widodo, commonly known as Jokowi, approaches the end of his second and final term in office next year, he is concentrating on completing his key projects and policies. These include the development of toll roads, the establishment of smelters, and the creation of a new government center in the county’s upcoming capital city.
In a recent interview with Bloomberg, President Jokowi expressed optimism about Indonesia’s economic future, foreseeing annual GDP growth of 7% by 2027-2028. This project hinges on his successor’s commitment to continuing his infrastructure initiatives and downstream reform policies.
The president’s ambitious forecast of 6% to 7% GDP growth by 2027-2028 is underpinned by the benefits of his policies. These encompass an aggressive infrastructure rollout and a drive for the onshore processing of mineral resources. If realized, the upper end of this annual forecast would mark the nation’s fastest pace of growth since 1996, according to compiled data.
However, President Jokowi emphasises the importance of continuity in leadership to achieve these economic goals. He believes that each successive leader should build upon the existing vision and orientation, rather than introducing entirely new agendas. This approach, he argues, is essential to prevent any setback in the nation’s progress.
As President Jokowi prepares to conclude his decade-long rule next year, he is leveraging his enduring popularity to support a presidential contender who shares his policy objectives. This strategic move aims to secure the legacy of the former furniture maker, positioning him to remain influential in Indonesian politics for years to come, possibly even establishing a political dynasty.
President Jokowi’s vision for a “Golden Indonesia”, a pledge made during his 2019 campaign, hinges on a comprehensive economic roadmap. This roadmap aims to elevate Indonesia’s per capita GDP to $25,000 by 2045 and generate 10 million jobs. In his final year in the office, he is also seeking incentives from the United States to support green energy transition while carefully managing the nation’s relationship with its most significant economic partner, China.