Indonesia’s economic growth projections in 2024 exude optimism based on various strong fundamental factors and proactive government policies. Indonesia’s economy, known as one of the largest and most dynamic in Southeast Asia, is expected to experience significant growth despite facing global challenges.
One of the main drivers of this projection is political stability and sustainable fiscal policy. The Indonesian government has demonstrated a strong commitment to structural reform and infrastructure development, which is expected to improve economic efficiency and attract more foreign investment. Good infrastructure will reduce logistics costs and increase the competitiveness of Indonesian products in the global market.
Apart from that, a strong domestic consumption sector is also an important pillar. With a population of more than 270 million people and a growing middle class, the purchasing power of Indonesian people makes a significant contribution to economic growth. Household consumption is expected to continue to increase in line with rising per capita income and employment growth.
President Joko Widodo projects that Indonesia’s economic growth in 2024 will be a very relevant and interesting topic to analyze. In the midst of various global and domestic challenges, Indonesia’s economic growth is expected to remain positive, although there are several factors that could influence its performance.
First, the legacy of massive infrastructure policies during the two terms of President Jokowi’s administration has provided a strong foundation for projected economic growth. The construction of toll roads, airports, ports and other infrastructure projects has increased connectivity and logistics efficiency, which in turn strengthens the national economic base. It is hoped that this infrastructure improvement will continue to have a positive impact on economic activity in various sectors, including trade, manufacturing and tourism.
Rating agency Moody’s estimates that Indonesia’s economic growth in 2024 will still move at the level of 5.1%. Supported by the strong potential for credit growth, even though the trend in Bank Indonesia’s benchmark interest rate is currently high. Moody’s Ratings Senior Vice President, Eugene Tarzimanov, said that his party is still targeting Indonesia’s real GDP growth of 5.1% in 2024.
Eugene said that banking credit distribution in Indonesia will still be very strong, because demand for credit is still high, especially for sectors such as manufacturing to agriculture which he estimates will benefit from fluctuations in commodity prices. He also estimates that credit growth in Indonesia in 2024 will still grow in the range of 10% to 12%. As of March 2024, OJK has also recorded growth in banking credit distribution reaching 12.4% on an annual basis from February 2024 which grew 11.28%.
Bank Mandiri Chief Economist, Andry Asmoro, also projects that Indonesia’s economic growth could reach 5.06 percent in 2024. This is accompanied by the end of a series of presidential election stages which will encourage economic actors’ confidence in expanding. Not only that, Andry said that with the start of the Pilkada stage later, it could also provide encouragement for consumption growth.
In line with Andry, Head of Macroeconomic and Financial Market Research PermataBank Faisal Rachman also projects that Indonesia’s economic growth is likely to be flat in the second quarter of 2024 or at 5.1 percent on an annual basis (year-on-year/YoY). However, entering the second quarter, Faisal reminded that throughout May there will be many national holidays and collective leave. This momentum can be maximized in terms of consumption expenditure in certain sectors such as tourism and leisure shopping activities.
However, there are several challenges that need to be faced. Global economic uncertainty, such as commodity price fluctuations and international trade tensions, can affect Indonesia’s exports. In addition, inflationary pressures and changes in global monetary policy can affect domestic economic stability. Therefore, adaptive and responsive economic policies are needed to overcome these challenges. Apart from that, economic diversification is an important strategy that must continue to be encouraged. Reducing dependence on raw commodity exports and strengthening other sectors such as manufacturing, tourism and the digital economy will provide greater resilience to external shocks.
The continuation of structural reforms that have begun during President Jokowi’s administration is also key. Reforms in the tax sector, deregulation and improving the investment climate must be continued to increase Indonesia’s competitiveness. Improving the quality of human resources through vocational education and training is also a priority to ensure a competent and productive workforce.
On the other hand, success in dealing with the COVID-19 pandemic and post-pandemic economic recovery efforts also play an important role in the 2024 economic growth projection. Successful vaccination programs and well-targeted economic stimulus policies have helped restore business and consumer confidence, which is a driving force main economic activity.
Projections for Indonesia’s economic growth in 2024 at the end of President Joko Widodo’s administration are estimated to be in the range of 5-6%. This figure reflects optimism regarding the sustainability of reform and the positive impact of infrastructure development. However, vigilance and readiness is still needed to face external and internal challenges that can affect economic stability and growth. With strong commitment from all parties, Indonesia has great potential to achieve sustainable and inclusive economic growth in the future.
