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Indonesia Economy Could Exceed Expectation Next Year, Minister Says

Indonesia may witness faster economic growth next year than it initially forecasts, according to Finance Minister Sri Mulyani Indrawati.

The country’s economy is forecast to grow by 5.4 percent in 2018, which is the fastest pace of expansion in five years for Southeast Asia’s biggest economy. However, Sri Mulyani is upbeat that a surge in the amount of investment into the country may significantly boost the growth of the economy.

“The growth rate of 5.4 percent is based on a combination of, on the one hand, a pick-up in exports, but with an investment that is still a bit conservative,” Indrawati said, as quoted by Bloomberg. “If we assume that investment will pick up, then I think we will have much more upside.”

However, the minister was also cautious of the effects that “domestic-orientated policies, especially in major countries” will have on Indonesia and its currency in particular.

The rupiah has dropped more than 3 percent against the dollar since reaching a 10-month high in September. In the US, rising interest rates and the imminent tax plan is believed to have boosted the dollar and caused the rupiah to suffer after reaching a 10-month high in September.

“Of course the announcement by President Trump on tax reform, lowering the rate, is creating again pressure for Indonesia,” Indrawati said. “A race to the bottom is worrying for all because it’s not a win-win game,” she said.

 

See: 2017 Salary Guidelines in Indonesia

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