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nalysts have deemed the 2019 growth target of 5.8 percent set by the administration of President Joko “Jokowi” Widodo to be too ambitious, considering Indonesia has yet to realize the 5.4 percent target set for this year.

PT Narada Kapital Indonesia analyst Kiswoyo Adi Joe said the 2019 growth target could be considered reasonable only if the country reached its 2018 target.

“The [5.8] figure is moderate, but only if Indonesia can reach the target of 5.4 percent in 2018,” he said.

The government could find it difficult to attain its growth target this year, with only 5.06 percent growth recorded in the first quarter, leaving Jokowi’s administration with a lot of catching up to do.

A further challenge is presented by the country’s trade balance deficit of US$1.63 billion, the biggest deficit in four years.

Finance Minister Sri Mulyani Indrawati said late last week that the government was confident the country’s economy could expand by around 5.4 to 5.8 percent. Analysts have said that Indonesia could meet the lower target of 5.4 percent.

According to data from Spain-based economic analysis firm FocusEconomics, the consensus on Indonesia’s growth for 2018 is 5.3 percent and 5.4 percent for 2019.

FocusEconomics economist Massimo Bassetti said Indonesia needed to take into consideration internal and external factors such as the level of debt held by state-owned enterprises (SOEs), cooling demand from China and rising global interest rates.

Indonesian Chamber of Commerce and Industry (Kadin) chairman Rosan Perkasa Roeslani said Indonesia had the potential to experience growth in 2019, as commodity prices were expected to increase following the oil price hike. Rosan, however, said he was cautiously optimistic.

“Historically, if commodity prices are high we will experience high growth. Looking at our flat consumption and the trade balance, which has been under pressure from a strong US dollar, we expect to see only 5.3 percent growth in 2019,” he said.

Kadin deputy chairwoman for international relations Shinta Kamdani said it would be hard for Indonesia to achieve the high growth target for 2019, as the government was likely to face more external challenges.

Shinta was referring to, among other factors, the planned interest rate hike by the United States Federal Reserve, which has resulted in global capital adjustments and broad-based currency depreciation, including the rupiah.

As Bank Indonesia (BI) has been forced to raise its interest rate to stabilize the rupiah, and given signals of further hikes in the next few months, Shinta said the interest rate increase had the potential to stunt economic growth.

Head of the Indonesia Employers Association (Apindo) expert team Sutrisno Iwantono said it would require a concerted effort on the part of all stakeholders if Indonesia wanted to achieve the 2019 growth target.

Sutrisno proposed that one means the government could employ to push the growth rate higher was to relax the tax regime, which would be essential to encourage business expansion.

“To grow the economy, businesses have to be encouraged [to expand], and to encourage business, taxes should be relaxed,” he said.

Sutrisno said the tax authority needed to expand its tax base if it wanted to pursue higher revenue to fuel GDP growth.

Shinta concurred with Sutrisno, adding that the relaxation of taxes, particularly to attract investment, was essential to attain the high growth target.