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World Bank expects Indonesia’s GDP to grow 5.2% in 2022, but risks loom
The institution believes the country’s economy can find its way back to pre-pandemic strength next year, but it hasn’t ruled out a major disappointment.
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A blue sky is seen above the usually polluted Jakarta on July 2, after public mobility declined in response to a COVID-19 spike in the city. (AFP/BAY ISMOYO)
T
he World Bank has predicted that Indonesia’s economic growth will return to pre-pandemic levels next year as the vaccination campaign continues, but downside risks may cloud the sunny forecast.
In its December country report, the bank predicted that the country’s GDP would grow 5.2 percent in 2022, up from the 5 percent it predicted in June.
The forecast assumes that most provinces will inoculate 70 percent of their residents and that the country will not see another devastating pandemic wave. It also assumes fiscal and monetary policies will stay accommodative as growth in global trade and commodity prices moderates.
“This is expected to release pent-up demand and help private consumption and contact-intensive sectors to rebound more strongly,” said Habib Rab, the bank’s lead economist for Indonesia and Timor-Leste, at an online event on Thursday.
If the forecast holds, Indonesia will return to its pre-pandemic growth after nearly two years battling the pandemic, which plunged the country’s economy into its first recession in more than two decades.
The Delta wave, which saw coronavirus infections peak at over 50,000 daily new cases in July, forced the World Bank to revise down this year’s economic growth forecast for the country from 4.4 percent to 3.7 percent.
Government countermeasures such as movement restrictions slowed economic growth to 3.51 percent year-on-year (yoy) in the July to September period, down from 7.07 percent yoy in the preceding quarter, Statistics Indonesia (BPS) data show.
