In the midst of uncertainty regarding the global economy, climate change, and declining prices of leading export commodities, the Indonesian economy remained well maintained and grew positively by 4.94% in Q3-2023.
This can be realized, because the Government continues to create various economic policy strategies to encourage economic resilience and revival. In terms of Household Consumption, to maintain people’s purchasing power and control inflation, the Government is continuing its social assistance policy, including additional rice food assistance of 10kg/KPM in December 2023 with a target of 21.3 million KPM and El Nino Direct Cash Assistance (BLT) of IDR 200 thousand/month during November-December 2023 with a target of 18.8 million KPM.
Apart from that, to strengthen MSMEs amidst high interest rates, the Government is encouraging the acceleration of KUR, through weekend banking, so that the absorption of KUR distribution is more optimal and can reach the target of IDR 297 trillion.
Secretary of the Coordinating Ministry for Economic Affairs, Suswijono Moegiarso, said that with the addition of these two assistance to the community, people’s purchasing power can be maintained and inflation controlled, especially in the context of continuously maintaining the household consumption component.
Meanwhile, the Governor of Bank Indonesia (BI), Perry Warjiyo, also admitted that he was optimistic that Indonesia would be able to face various global financial market challenges in 2024. This feeling of optimism was due to 3 things. First, Indonesia has previously demonstrated success in maintaining the economic recovery process. In this case, recovery is reflected in increasing economic growth, low inflation rates, and a strengthening Rupiah exchange rate.
Second, a sense of optimism is needed in facing various challenges in 2024. One of them is increasing geopolitical tensions which have the potential to hold back the disinflation process and the risk of a sharper global economic slowdown. In dealing with this, BI has launched innovation and transformation programs based on technology and digitalization.
Third, collaboration is the key to facing challenges, including facing volatility in 2024. With collaboration and a sense of optimism from each party, Bank Indonesia believes that Indonesia will again be able to overcome various challenges in the year of the Wooden Dragon.
Apart from that, the Deputy Governor of BI, Aida S. Budiman also highlighted 3 main issues which were deemed important for the central bank to pay attention to, namely the dynamics in the global financial world in 2024 which require vigilance.
Then, the key strategy for facing challenges, where BI’s policy mix strategy refers to Consistency, Innovation and Synergy (CIS), to the resilience of foreign exchange reserves which need to be maintained in anticipating economic fluctuations while still adhering to the principles of liquidity, security and profitability.
Several policies implemented by the Government to encourage increased exports include the formation of a National Export Increase Task Force, opening opportunities for new markets such as non-traditional markets, and strengthening trade cooperation.
With the series of activities for the 2024 election, spending on political activities has had a positive impact on the economy, both directly and indirectly. Such as the printing, advertising, media, transportation, logistics, food & beverage, textile garment and service sectors which are currently surging.
Historically, election periods tend to encourage domestic economic activity through government spending and other consumption spending, especially non-profit institutions that serve households. Apart from that, election activities will also grow real GDP and increase the circulation of money in circulation.
From a long-term perspective, 2024 will be an important foundation year before the implementation of the 2025-2045 National Long Term Development Plan (RPJPN). A transformative development approach will be taken to achieve the vision of a Golden Indonesia 2045.
The development agenda in 2024 is also supported by the APBN policy focus. Fiscal policy is designed with the aim of accelerating national development targets and priorities. The economic transformation agenda, including the downstreaming of natural resources, both mining and food products, will also continue.
Furthermore, the Government will continue a series of policy strategies to increase sustainability through accelerating the energy transition, developing an electric car ecosystem, and building carbon storage. Then increase productivity through digital innovation and continue structural reform and transformation which includes accelerating infrastructure projects on connectivity, improving institutional quality, implementing the Job Creation Law, and industrialization.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, said that his party was also optimistic about the positive steps taken by Indonesia’s accession to OECD membership, that Indonesia would become the first ASEAN country to become an OECD member. Membership will bring several benefits, including increased reputation and transparency, high policy standards, and increased investor confidence in Indonesia, so that the target is that we will be able to get out of the middle income trap.
Therefore, synergy and collaboration between the parties must be maintained and strengthened because it will be the main key to achieving the common goal, namely strong economic growth in Indonesia.
Strengthening the economic structure also needs to continue. In the short term, fiscal-monetary policy synergy, supported by financial system stability policies and strengthening structural policies need to continue to be strengthened to support sustainable economic growth.
In the medium to long term, real sector transformation needs to continue to be strengthened to increase economic capacity and encourage the revival of the national economy towards a developed Indonesia.