By: Safira Tri Ningsih)*
In a world full of uncertainty, especially in the global economic sector, Indonesia provides a joyful story. Amidst the turbulent global challenges, Indonesia’s economy continues to show positive signals, proof of the strength and resilience of the national economy.
When world credit rating agencies such as Standard & Poor’s (S&P) againined the sovereign credit rating of Indonesia at the BBB level with a stable outlook, this is not just a figure on paper. It is a reflection of the international confidence in Indonesia’s strong economic prospects.
The Bank of Indonesia (BI), as a guardian of economic stability, sees the move as a confirmation of the world’s confidence in the economic policies taken by the government and BI. In his statement, BI Governor Perry Warjiyo reaffirmed that the affirmation is a real proof that the policy synergies that have been achieved have managed to maintain macroeconomic stability as well as the financial system amid continuing global uncertainty.
This credit affirmation also reinforces the confidence of other rating agencies such as Fitch and Moody’s, which had previously issued similar affirmations in early 2024. It affirms that Indonesia remains on the right track inining sustainable economic stability.
Of course, this stability does not just come from one direction, but is the result of strong policy coordination between BI and the government inining a balance between domestic economic needs and global challenges.
S&P estimates Indonesia’s economic growth prospects will remain solid over the next few years, with economic growth forecasts in the 5 percent range. This growth is driven by strong domestic demand, as well as increased government spending and private investment.
In the medium term, the resilience of Indonesia’s external sector is also believed to remain awake, thanks to increased exports backed by a policy of industrialization.
It shows that Indonesia not only survives, but also manages to harness domestic potential to maintain economic growth. S&P also believes that the innovation of pro-market monetary operations strategies with the use of market-based instruments is increasing Indonesian monetary policy flexibility, an important step inining economic stability amid global volatility.
On the other hand, the government’s commitment to keep the fiscal deficit below 3 percent of gross domestic product (GDP) is also a positive point in S&P’s assessment. It shows that despite the challenges, the government remains firmly committed to the principles of economic policy sustainability.
The government strives not to slip into significant economic disruptions,ining crucial credibility and stability amidst global uncertainty.
Finance Minister, Sri Mulyani Indrawati, also gave a fairly optimistic projection of Indonesian economic growth. According to him, Indonesia’s economic growth will reach about 5 percent in the second quarter of 2024, slightly slower than the previous quarter, which recorded a figure of 5.11 percent. Despite a slight decline, this remains seen as a positive sign amid a global situation that tends to slow down.
Positive economic performance in the second quarter was supported by a variety of factors, including household consumption and gross fixed capital formation (GFP) or investment. These two factors are the main drivers of economic growth, and are expected to continue to support the economic pace until the end of 2024.
Besides, better domestic exports than the first quarter also contributed significantly. Exports of manufacturing and mining products to emerging markets such as India and China are highlights.
These two countries now have a growing role in global trade, and Indonesia has managed to seize this opportunity to strengthen its position in the international market.
To maintain this momentum of growth, the government plans to continue to rely on fiscal policy, focusing on the country’s income and spending budgets. (APBN). Government purchases will continue to be directed to maintain price stability, which has a major impact on people’s purchasing power.
Stable household consumption is key toining economic growth, and governments are aware of this by keeping the social security net for vulnerable communities.
In a global situation full of uncertainty, these measures are crucial. Governments and BI are not only focusing on short-term growth, but also on how to maintain long-term economic stability.
Byining price stability and purchasing power, the government strives to ensure that the Indonesian economy continues to grow despite serious global challenges. The government is optimistic that with the right policies and focus on strengthening the domestic economy, this growth can be achieved without having to sacrifice the economic stability that has been built.
Faced with global challenges, the Indonesian economy continues to show positive prospects. Credit affirmations by S&P and other rating agencies, as well as stable economic growth projections, provide signals that Indonesia is on the right track.
Proactive fiscal and monetary policies, as well as the government’s commitment to preserving price stability and people’s purchasing power, are key factors inining economic growth momentum. Thus, we all have to be optimistic that Indonesia’s economic future will remain bright, even in the midst of a challenging situation.
)* Author is Contributor Daris Library