TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Infrastructure spending to help maintain Indonesia's economic growth
Tightening global financial conditions have affected Asia, particularly Indonesia and the Philippines, which saw their borrowing costs rise abruptly, according to a flagship report released by the ASEAN+3 Macroeconomic Research Office (AMRO) in Fiji.
Change Size
Participants gather in Nadi, Fiji, from May 1 to 5 for the 52nd Annual Meeting of the Asian Development Bank’s (ADB) Board of Governors. (Courtesy of Asian Development Bank/-)
T
ightening global financial conditions have affected Asia, particularly Indonesia and the Philippines, which saw their borrowing costs rise abruptly, according to a flagship report released by the ASEAN+3 Macroeconomic Research Office (AMRO) in Fiji on Wednesday.
Capital outflows from those regions totaled US$6 billion in September and October as foreign investors liquidated portfolios, according to the report.
Just like other emerging markets, Indonesia has been confronted with external pressure. As a result, Bank Indonesia has tightened monetary policy to ensure financial stability, by raising its key policy rate six times from May-November 2018 by a cumulative 175 basis points.
AMRO expects Indonesia’s real GDP growth to be 5.1 percent in 2019 and 2020, similar to the 5.17 percent rate achieved in 2018.
Hoe Ee Khor, chief economist with AMRO, said at this point, despite the expected slight decrease in growth, he was optimistic that the Indonesian government had done the right move to ensure the economy would grow at a healthy pace in the future.
“Last year was a very bad year for Indonesia. The country was hit by natural disasters and capital outflow. Yet, the economy still managed to grow by 5.2 percent,” he said, indicating the country’s economic resilience.
To ensure that the economy would grow faster in the future, AMRO suggested that the government keep increasing infrastructure spending, aside from further tweaking business-related policies.
