WHILE EXPRESSING optimism on global economic momentum this year, the International Monetary Fund has maintained its estimate for gross domestic product growth in Indonesia.
In its “2017 World Economic Outlook”, the IMF set its forecast for Southeast Asia’s largest economy at 5.1 per cent, unchanged from its 2016 estimate, affirming the government’s projection at the same level.
The IMF sees Indonesia’s annual growth rate at 5.3 per cent in 2018.
“I think 5.1 per cent is a very good rate in today’s world. Remember we are still living with the legacy from the global financial crisis in the US,” the IMF’s division chief for Asia-Pacific Luis Breuer said here on Wednesday.
In its “Global Financial Stability” report, the fund warned that emerging markets – including Indonesia – and developing economies remained at risk from a rapid rise in interest rates, US dollar appreciation and lower commodity prices.
Those risks could exacerbate debt vulnerabilities and trigger the materialisation of “contingent liabilities, in particular those related to implicit government guarantees on corporate borrowing”. Amid those uncertainties and challenges, Indonesia had to implement the right policy mix to reach its 5.1-per-cent target.
“We think that many countries would love to grow by 5 per cent. For large countries like Indonesia with GDP that almost (reaches) a trillion dollars, growing 5.1 per cent is very fast,” he said.
The World Bank revised its estimated rate of Indonesian economic growth down to 5.2 per cent in its April edition of the “East Asia and Pacific Economic Update” report, compared to the 5.3 per cent set in the January edition of the “Indonesia Economic Quarterly”.
However, World Bank Indonesia economist for macroeconomics and fiscal management Dhruv Sharma said the 10-basis-point decline was largely “mechanical”.
The more important thing was that it projected Indonesia’s economy to grow in the near term.
“We have an upward trajectory for Indonesia over the next three years as the economy reached bottom last year,” he said in a press briefing in Jakarta yesterday.
The report forecast 2018 and 2019 GDP to grow by 5.3 per cent and 5.4 per cent, higher than the 5.02 per cent in 2016.
That is in line with global economic growth, which is predicted at 2.7 per cent in 2018 and 2.9 per cent in 2019, compared to 2.3 per cent in 2016.