TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Unlocking the future, investing in Indonesia's human capital
I found a notable difference in tone on the global economy: Optimism was in the air.
Change Size
I found a notable difference in tone on the global economy: Optimism was in the air. (Shutterstock/File)
T
he World Bank Group annual meetings have just concluded. As finance minister, I represented Indonesia at the institution’s Board of Governors and advocated for our nation’s interests. Upon returning from the meetings, I found a notable difference in tone on the global economy: Optimism was in the air.
The recent World Economic Outlook repart projected global growth to rise to 3.6 percent this year and 3.7 percent next year. This is credited to an upswing in economic activity: increased investment, trade and industrial production. Upward trends in the eurozone, Japan, Russia, emerging Asia and Europe are helping fuel this growth. Furthermore, the strengthening of business and consumer confidence will further support recovery.
For Indonesia, this is the good news we have been waiting for. Even amid the global volatility, our economy is growing at around 5 percent. The global trend helps improve our exports and provides a third engine of growth beyond consumption and investments. This also means our growth is less reliant on government spending.
We are also monitoring the global downside risks, namely productivity lag, accumulation of private sector debt and geopolitical uncertainties. The increase in the US Fed rate also brings the risk of reverse capital flow. However, since most of Indonesia’s investments are foreign direct investments, we are less vulnerable to reverse capital flow.
President Joko “Jokowi” Widodo constantly reminds the Cabinet to continue to push through key reforms, and this upturn provides further momentum. It will also give us an additional opportunity to further work towards inclusive growth and have the fiscal space to invest more in our human capital.
For me, the most interesting discussion at the annual meetings was about promoting inclusive growth. A rising tide needs to lift all boats. Making economic growth inclusive and beneficial to the masses is something we need to strive for. In my view, a big part of the solution is by investing in our human capital.
As part of the annual meetings, I spoke at the Human Capital Summit and shared the stage with President Paul Kagame of Rwanda who made human capital investment a priority.
