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Indonesia’s economic growth to dip below 5 percent in 2023, HSBC says
HSBC has forecast the Indonesia’s economic growth to decline under 5 percent for the 2023 fiscal year amid global economic uncertainty and the political dynamics ahead of next year’s elections.
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A man walks past an electronic display at the Indonesia Stock Exchange in Jakarta on Jan. 2, 2023. (AFP/Adek Berry)
G
lobal banking giant HSBC projects that the Indonesian economy will be rather sluggish this year with GDP growth below 5 percent during the current political cycle, alongside global economic uncertainty.
Pranjul Bhandari, chief India and Indonesia economist at HSBC Global Research, said that investors often opted to “wait and watch” as the year progressed and the election took hold, which they perceived as uncertainty.
“This year is not a year for high growth, it’s a year for sort of more gradual growth recovery,” Bhandari told reporters during a media briefing on Friday. She added that there were other factors at play behind the projected slowdown aside from the lead-up to the 2024 general election.
HSBC’s projection is in stark contrast to the government’s target of 5.3 percent in the state budget for this year.
Bhandari said the expected slowdown in Indonesia’s growth was also due to the impacts of a weakening global economy, “Because what’s happening globally matters,” she said.
This week, Germany became the latest country to enter a recession following two consecutive quarters of negative GDP growth.
Meanwhile, central banks around the world have been embarking on monetary tightening after a decision by the United States Federal Reserve (Fed) to again hike rates to bring down inflation in the country. The rate hike in early May to between 5 and 5.25 percent is reportedly the Fed’s 10th consecutive since March 2022 and the highest since mid-2007.
