By: Argista R
National economic resilience has become a top priority for governments in various parts of the world, especially in the increasingly complex global uncertainty we are currently experiencing. In the midst of geopolitical dynamics, climate change and changes in the global economic paradigm, the sustainability and resilience of a country’s economy is the key to facing all challenges.
Indonesia, as one of the largest economies in Southeast Asia, has demonstrated extraordinary economic resilience amidst various global challenges. Even though the world faces economic uncertainty due to the COVID-19 pandemic, trade wars and geopolitical instability, the Indonesian economy continues to show signs of health and stability.
Indonesia has a fairly diversified economy. Sectors such as agriculture, manufacturing, services, and mining all make significant contributions to Gross Domestic Product (GDP). This diversification helps reduce the risks faced by the country when one particular sector experiences pressure.
Indonesia’s economic growth is still recorded as quite strong amidst uncertain global economic conditions. Data from the Central Statistics Agency (BPS) shows that Indonesia’s economic growth in the third quarter of 2023 continues to grow strongly at 4.94% (yoy), although it has slowed slightly from growth in the previous quarter which was 5.17% (yoy).
BI Governor Perry Warjiyo said the Indonesian economy remained resilient during a period of high global uncertainty. This is reflected in economic growth in the first quarter of 2024 which was recorded at 5.11 percent year on year (yoy), an increase compared to growth in the previous quarter of 5.04 percent (yoy).
Bank Indonesia (BI) has taken wise steps in managing monetary policy. Controlling inflation and stability of the Rupiah exchange rate is the main focus, which creates a more stable and predictable economic climate.
Chief Investment Officer for Southeast Asia and India at HSBC Global Private Banking and Wealth, James Cheo, said that the Indonesian economy remains healthy, supported by strong domestic consumption. Economic growth will be supported by strong credit growth with the influence of foreign investment and infrastructure spending.
The Indonesian government has carried out various structural reforms to increase economic competitiveness. These steps include improving infrastructure, simplifying business regulations, and increasing foreign investment. These reforms helped create a more conducive business environment.
Coordinating Minister for Economic Affairs Airlangga Hartarto said that Indonesia’s economic growth is currently still strong and healthy. The solid economic growth in this quarter was also confirmed by various rating agencies which provided positive assessments that Indonesia’s economic resilience was maintained, supported by high and stable economic growth.
To keep the economy growing amidst global pressure, the government has allocated a fiscal stimulus budget. These funds are used for various programs, including social assistance, support for small and medium enterprises (SMEs), and infrastructure investment.
SMEs are the backbone of the Indonesian economy. The government provides various incentives and assistance, including low-interest credit and training to improve business skills. This step is important to maintain the sustainability and growth of the MSME sector amidst economic uncertainty.
Massive investment in infrastructure, such as toll roads, ports and airports, not only creates jobs but also increases logistics efficiency and connectivity between regions. This helps increase the overall competitiveness of the Indonesian economy.
The government is also encouraging the digitalization of various economic sectors. E-commerce and fintech are growing rapidly in Indonesia, making a significant contribution to GDP and opening up new opportunities for people to participate in the digital economy.
The government places human resource development as a top priority. Investments in education and skills training are expected to produce a more competent and productive workforce, which will ultimately increase Indonesia’s economic competitiveness on the global stage.
Global uncertainty, including geopolitical tensions and changes in economic policies in developed countries, can affect the Indonesian economy. The government needs to continue to monitor global developments and adjust domestic policies as needed.
Even though there has been economic growth, inequality of income and opportunity is still a problem. The government needs to strengthen redistribution policies and ensure that the benefits of economic growth can be felt by all levels of society.
The Indonesian economy has demonstrated impressive resilience amidst global uncertainty. Various factors such as economic diversification, prudent monetary policy, and structural reforms have helped maintain economic stability. Policy steps taken by the government, including fiscal stimulus, support for MSMEs, infrastructure investment, and economic digitalization, have strengthened Indonesia’s economic foundations.
Looking ahead, Indonesia’s economic prospects remain bright, although there are challenges that need to be overcome. Post-pandemic recovery, growth in foreign investment, construction of a new capital city, and development of human resources are some of the factors that will encourage economic growth. However, the government must also be ready to face the challenges of global uncertainty, economic inequality and climate change to ensure that the Indonesian economy remains healthy and sustainable.
)* Economics Student Univ. Surakarta
