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World Bank downgrades Indonesia growth outlook, calls for reforms on grim global economy
Indonesia’s economy is projected to grow by 5 percent this year, the lowest annual economic growth since 2016, according to the October 2019 edition of the World Bank’s East Asia and Pacific Economic Update published on Thursday.
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Workers at a garment factory in Ungaran, Semarang, Central Java, carry out short daily exercise in between work on Thursday, Oct. 3. (Jakarta Post/Ardila Syakriah)
T
he World Bank has cut Indonesia’s economic growth forecast for 2019, calling for reforms for East Asia and Pacific economies as they will be under long-term threat from increasing global trade tensions.
Indonesia’s economy is projected to grow by 5 percent this year, the lowest annual economic growth since 2016, according to the October 2019 edition of the World Bank’s East Asia and Pacific Economic Update published on Thursday.
The 0.2-percentage-point cut from April’s forecast for Indonesia is in line with a broad-based deterioration in the economic growth outlook for the developing East Asia and Pacific region, excluding China, which is seen at 4.9 percent. The World Bank previously expected the region to grow 5.2 percent.
The lower growth projection reflects weakening global demand and heightened uncertainty around ongoing United States-China trade tensions that have led to a decline in exports and investment growth, testing the resilience of the region, according to the report, titled “Weathering Growth Risks”.
Therefore, countries in the region need to take an “active policy response” by using monetary and fiscal policy tools to stoke growth, said lead economist for East Asia and the Pacific, Andrew Mason.
“It would be important for countries to enact structural reforms to enhance competitiveness, improve business environments, attract investment and encourage innovations,” Mason said in a teleconference from Bangkok on Thursday. “These reforms are important for countries in East Asia and the Pacific even in good times, but they are particularly important this moment in an increasingly difficult international economic development.”
The International Monetary Fund (IMF) and Asian Development Bank (ADB) previously cut economic growth prospects for the world and for Asia, respectively. The World Trade Organization (WTO) slashed its global trade growth outlook significantly to 1.2 percent this year from a previous forecast of 2.6 percent.
