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Indonesia's economic recovery goals pushed back to 2022
The macroeconomic assumptions in the 2022 state budget reflect an expectation that the economy will rebound to pre-pandemic levels next year.
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Finance Minister Sri Mulyani discusses the 2022 state budget at a press conference at the ministry’s building in Jakarta on Monday. (Finance Ministry/Public relation team)
T
he macroeconomic assumptions of a recently released 2022 state budget draft reflect the expectation that Indonesia’s economy will largely return to pre-pandemic conditions by 2022, a postponement of predictions outlined in the 2021 budget.
The 2022 draft presumes that some key macroeconomic indicators such as gross domestic product (GDP) growth, the inflation rate and the poverty rate will return to levels seen in 2019 or earlier by next year, but economists warn that downside risks loom.
The government expects GDP to grow up to 5.5 percent next year on the back of reforms set in motion, in part, by the Job Creation Law. The forecast matches the approximately 5 percent growth seen in the years before the pandemic.
“Of course, this requires hard work, including quite deep reforms so that our economy becomes more productive,” Finance Minister Sri Mulyani Indrawati said during an online press conference on Monday.
“The reforms are related to [human development], education, healthcare, social protection and infrastructure for mobility, connectivity and productivity, as well as bureaucratic and regulatory reform, such as the Online Single Submission system.”
Read also: Belt-tightening key theme of 2022 budget
The 2021 state budget, too, predicted that Indonesia’s GDP would grow by some 5.5 percent, but the government has slashed the best-case projection to 4.5 percent following the enactment of multi-tiered public mobility restrictions (PPKM).
