Prabowo Optimistic for 8% Economic Growth, Raising Doubts After Jokowi's Shortfall

TEMPO.CO, Jakarta - President-elect Prabowo Subianto expressed optimism about achieving 8% economic growth, even placing a friendly bet with ministers from neighboring countries on his success. This ambitious target comes after Joko Widodo or Jokowi, the outgoing president, promised a 7% growth rate during his 2014 campaign. However, Jokowi's administration ultimately delivered an average growth of around 5% per year.

Despite falling short of the promised 7%, Jokowi's administration points to Indonesia's performance exceeding some regional neighbors. For example, the third quarter of 2023 saw Indonesia's economy grow at 5.05%, compared to Malaysia's 3.9% and Thailand's 2.5%.

During the 2024 presidential campaign, Prabowo pledged to reach 8%, while other candidates, Anies Baswedan and Ganjar Pranowo, targeted 5.5-6.5% and 7% respectively.

“Many journalists recorded it. There are even ministers from another country who are betting on me,” Prabowo said while delivering President Jokowi’s remarks at the launch of the One Map policy as monitored on the Indonesian Economy YouTube, Thursday, July 18.

Prabowo believes Indonesia has the potential for 8% growth, but emphasizes the need for efficiency and improved management. “[We need to] take sensible policies,” he said. He advocates for a government committed to eliminating corruption, fraud, and policies that do not benefit the nation and its people.

Jokowi's initial high-growth aspirations ultimately fell short. The COVID-19 pandemic was cited as a major contributor to this gap. Consequently, a 5% growth rate is now considered a positive outcome, despite its shortcomings in poverty reduction and social welfare improvement, which were evident from the continuously rising social assistance budget, with 2024 projected at Rp496 trillion, only slightly below the peak pandemic level of Rp500 trillion.

Furthermore, the open unemployment rate remains high at 5.32% or 7.86 million people as of August 2023. Labor absorption is also declining, leading to a high rate of informal workers at 59.11% of the workforce as of August 2023. Additionally, signs of deindustrialization are evident in the decreasing contribution of the manufacturing sector to GDP.

Economists Remain Skeptical

Prabowo's ambitious target is met with skepticism by Didik J. Rachbini, a researcher at the Institute for Development of Economics and Finance (Indef). He expressed pessimism about achieving the target under current policies.

Didik criticized the Industry Ministry under the Jokowi administration for its ineffectiveness in boosting the crucial industrial sector, which has stagnated with growth of only 3-4%. He believed that without significant policy changes to revitalize the industrial sector, achieving high economic growth remains unlikely.

TIM TEMPO

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