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Indonesia’s economy at risk as global recession looms: World Bank
Indonesia’s gross domestic product (GDP) growth could slow to 4.9 percent next year and slide further to 4.6 percent in 2022 amid intensifying risks such as the escalating trade war between the United States and China.
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President Joko “Jokowi” Widodo delivers his speech at the IMF-World Bank Annual Meeting in Nusa Dua, Bali, on Oct. 12. (Antara/Puspa Perwitasari)
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o:p>Indonesia’s economy, which has been growing steadily at around 5.3 percent per year on average since the start of the millennium, could be dragged down as it faces downside risks associated with the increasingly clouded outlook for the global environment, the World Bank has said.
The assessment was one of many points discussed during a closed-door meeting between President Joko “Jokowi” Widodo and World Bank country director for Indonesia and Timor-Leste Rodrigo A. Chaves, among other officials, at Merdeka Palace last week.
According to the World Bank’s meeting material, a copy of which was obtained by The Jakarta Post, Indonesia’s gross domestic product (GDP) growth could slow to 4.9 percent next year and slide further to 4.6 percent in 2022 amid intensifying risks such as the escalating trade war between the United States and China.
“Growth in Indonesia has been slowing and will weaken further with the global slowdown – a global recession would be damaging,” one of its slides read.
The Washington, DC-based institution also estimated that if the growth rates of China and the US fell by 1 percent, it would trim 0.3 percent off the growth of the Indonesian economy.
Indonesia’s economy, the largest in Southeast Asia, expanded by 5.05 percent in the second quarter, softening from 5.27 percent recorded over the same period last year, according to Statistics Indonesia (BPS) data. The government expects the economy to grow 5.3 percent this year as stated in the 2019 state budget.
The World Bank’s bleak outlook, it explained, was driven by weak productivity and slowing workforce growth, while lower commodity prices due to the global economic slowdown would also further hurt the economy, according to the meeting’s materials.
