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World Bank warns of downside risks to GDP
Amid rising inflation and global interest rates, the World Bank released a downside growth scenario where Indonesia’s GDP growth would fall short of the government’s target in both 2022 and 2023.
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President Joko “Jokowi” Widodo welcomes World Bank officials at Merdeka Palace in Jakarta on Feb. 16. (BPMI Setpres/Muchlis Jr.)
T
he World Bank warns that Indonesia’s GDP growth this year and next could fall far short of the government’s targets should inflationary pressure and therefore global interest rates rise.
In a report published on Wednesday, Indonesia Economic Prospects June 2022, the World Bank maintains its baseline scenario for the country’s economic growth at 5.1 percent in 2022 and 5.3 percent in 2023 but warns that it could be as low as 4.6 and 4.7 percent, respectively in a downside scenario.
The report contains no upside scenario.
The government projects 2022 growth at 4.8 to 5.5 percent and 2023 growth at 5.3 to 5.9 percent, while the Organization for Economic and Cooperation Development (OECD) sees domestic growth this year at 4.7 percent.
Even in the downside scenario, Indonesia would fare better than the emerging economy average estimate of 3.4 percent in 2022 and the global average of 3 percent in 2023.
“Given the global conditions […] a synchronized and broad-based slowdown in global growth is bound to also impact Indonesia,” World Bank Indonesia and Timor-Leste lead economist Habib Rab told reporters on Wednesday.
Read also: World Bank sees Indonesia’s GDP rebound to 5.1 percent this year
