National Economy at Lowest Growth Point

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  • TEMPO.CO, Jakarta - One by one, international agencies revised their outlooks on Indonesia's economy. Recent correction came from the World Bank, who cut its growth forecast from 5.2 percent to 4.7 percent.

    "This is the lowest level of economic growth since 2009," Rodrigo Chaves, World Bank Country Director for Indonesia, said yesterday.

    In its report titled 'Indonesia Economic Quarterly July 2015', the World Bank said Indonesia's economy is still adjusting to commodity price declines and the prospects of monetary policy normalization by the United States.

    The two factors, the report said, have caused deficits in the current account, lower the revenues of companies working in the commodity sector, and decelerate private investment.

    The lender also said that Indonesia has domestic and external challenges to face. From overseas, Indonesia is faced with financing in foreign currency and financial risks posed by Europe's slow post-crisis recovery.  

    Domestically, Indonesia must deal with the pressure on individual consumption due to inflation, the rupiah depreciation, and low consumer confidence. There is also the decline in government spending due to low revenues and slow of budget absorption, as well as a slowdown in investment due to low investor confidence, sluggish infrastructure spending and credit slowdown.

    Earlier, the Asian Development Bank (ADB) lowered Indonesia's economic growth for this year, to 5.0 percent. According to the ADB, Indonesia's declining economic growth is caused by three factors: the effect of global conditions, the slow realization of government projects, and the postponed benefits people get from structural reforms.

    Meanwhile, the IMF had corrected Indonesia's growth projection from 5.2 percent to 4.7 percent. Bank Indonesia also corrected its growth outlook from 5.4-5.8 percent to 5.0-5.4 percent, below the 2016 state budget assumption of 5.8-6.2 percent.