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World Bank lowers Indonesia’s growth forecast to 5.1%
The Washington-based lender cited risks stemming from the Ukraine war, United States monetary tightening and an economic slowdown in China.
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A stage director looks on at an IMF-World Bank meeting in Washington, DC, on Oct. 18, 2019. (AFP/Andrew Caballero-Reynolds)
T
he World Bank has cut its projection for Indonesia's 2022 gross domestic product (GDP) growth from 5.2 percent to 5.1 percent, in response to economic shocks resulting from the Ukraine war and other sources of global economic distress.
The bank said in a report on Tuesday that monetary tightening in the United States and an economic slowdown in China also threatened the already uneven global recovery from the pandemic. In the worst-case scenario, the bank projected that Indonesia's economy could grow 4.6 percent this year.
The revision was in line with the bank’s overall GDP growth forecast for developing East Asia and Pacific (EAP) countries, which it said would slow by 0.4 percentage points to 5 percent and could fall further to 4 percent growth if conditions worsened.
“Just as the economies of East Asia and the Pacific were recovering from the pandemic-induced shock, the war in Ukraine [began] weighing on growth momentum,” World Bank vice president for EAP Manuela V. Ferro said on Tuesday.
Read also: IMF downgrades Indonesia's 2022 GDP growth to 5.4%
Indonesia's economy bounced back to 3.69 percent growth in 2021 after booking a record contraction of 2.07 percent the year before. This year, the government aims to reach up to 5.5 percent GDP growth, banking on a stronger economic recovery and policies that treat COVID-19 as an endemic disease to be managed rather than one to be entirely prevented.
However, the war in Ukraine and other world events have disrupted the projection, as Indonesia now faces significant inflation, partly caused by surging commodity prices.
