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Economists project RI economy to grow below 5% this year
Bank Mandiri projects that Indonesia’s gross domestic product growth will grow to 4.93 percent year-on-year (yoy) this year, while Bank Permata forecasts 4.78 percent. Both mark a slower pace from 5.02 percent last year.
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On the rise: High-rise buildings are seen illuminated by the sunset on Aug. 2, 2024, in the Sudirman Central Business District (SCBD) of South Jakarta. (Reuters/Ajeng Dinar Ulfiana)
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conomists forecast that Indonesia’s gross domestic product growth will fall below 5 percent this year thanks to domestic consumption slowdown and global turbulence dragging down investment.
State-owned lender Bank Mandiri macro and financial market research head Dian Ayu Yustina revealed in a press briefing on Monday that it projected the country’s economy would grow by 4.93 percent year-on-year (yoy) this year, lower than last year’s 5.02 percent.
The estimate is based on decreased first quarter growth of 4.87 percent yoy because of lower household consumption, which only reached 4.89 percent yoy, and government consumption, which contracted by 1.38 percent yoy.
“Admittedly there’s an effect from normalization because of the general election in the first quarter of 2024. Household consumption during the election increased and subsequently we see the base effect this year,” Dian said. She said that the first quarter’s household consumption growth was “stable” thanks to the Idul Fitri festive season, when people normally spend more.
Dian projected that GDP growth in the second quarter would likely be higher thanks to the boost from government consumption, which contracted in the first three months of this year because of the budget reallocation policy, which temporarily restricted state spending.
The projection for the second quarter growth was only 4.92 percent yoy, but Dian noted that it might reach a faster tick if the central bank and government loosen monetary and fiscal policies.
Read also: Govt sticks to 5 percent growth target despite IMF's downward revision
