Government and DPR Assumption: Indonesia's Economy Can Grow 5.7% in 2024

The Indonesian government and the House of Representatives (DPR) have agreed on several macroeconomic assumptions for the preparation of the 2024 State Budget (RAPBN).

One of these assumptions states that the Indonesian economy in 2024 could grow in the range of 5.1% to 5.7%.

However, the lower bound of this assumption has been cut from previous estimates.

"The assumption of economic growth, which was initially estimated at 5.3%-5.7%, has been adjusted to 5.1%-5.7% to be more realistic, in line with recent developments and external challenges and risks," said the Ministry of Finance team in its press release (June 8, 2023).

According to the Ministry of Finance team, the lower bound of the assumption was lowered due to reasons related to the global situation.

"The participants of the working meeting (the Government together with Commission XI of the DPR) are of the opinion that the escalation of geopolitical tensions has caused increased uncertainty and global fragmentation, which has a significant impact on international investment and trade flows," said the Ministry of Finance team.

"Indications of a slowdown in global economic performance are also increasingly visible, especially in many developed countries and China," it continued.

According to the Ministry of Finance team, several domestic economic indicators are showing expansionary signals, such as consumption activity showing a strengthening trend.

However, the domestic economy could also be impacted by global dynamics, particularly regarding a decline in export performance.

"Investment performance also has the potential to be hampered, in line with the wait-and-see attitude of businesses regarding global economic dynamics and the period leading up to the general election," said the Ministry of Finance team.

On the other hand, in its April 2023 World Economic Outlook (WEO) report, the International Monetary Fund (IMF) projects that Indonesia's economic growth will reach 5.1% in 2024.