Nearly two-thirds of economists surveyed by World Economic Forum 2023 believe a recession is likely in 2023, causing concern among many countries around the world. Indonesia’s current position is quite good with its economy growing 5.2% in 2022 and is expected to grow 5.0% in 2023. Indonesia has a strategic position as chair and host of ASEAN Summit 2023 following its successful hosting of the G20 summit. Additionally, despite rising inflation, Indonesians’ consumption is expected to increase ahead of Eid al-Fitr.

Managing Director & Chief Economist at DBS Group Taimur Baig said at Asian Insights Forum 2023 that Indonesia will remain resilient in the midst of global economic uncertainty. This is because Indonesia does not depend too heavily on the global economic system, which is a great advantage. “As a member of the G20, an international community that is stable in terms of democracy and transfer of power, this is certainly a big advantage considering that many countries have not been able to connect to this global network. Additionally, over the past 20 years, Indonesia’s debt-to-gross domestic product (GDP) ratio has been quite healthy, unlike the US, India, and other European countries with a debt-to-GDP ratio of up to 100% due to multiple crises they have to deal with,” said Taimur Baig.

On the same occasion, Coordinating Minister for Economic Affairs Airlangga Hartarto said the government has formulated strategies to maintain resilient economic growth. “Indonesia has set 16 priority economic deliverables that are divided into three strategic focuses, namely; recovery, rebuilding, digital economy, and sustainability. Additionally, Indonesia's main strategies to improve economic integration and strengthen ASEAN competitiveness, to realise ASEAN as a centre of economic growth, include; first, digital transformation. With the expansion of local currency transactions or QRIS and the acceleration of negotiations for the Digital Economy Framework Agreement (DEFA). It is expected to be finalised at the 23rd ASEAN Economic Community Meeting in September 2023.”

“Second, strengthening connectivity through improving air and sea connectivity, and encouraging the realisation of the ASEAN power grid. Third, further strengthening the ASEAN supply chain and logistics system, and, of course, cross-sectoral cooperation to ensure food defense in the region, as well as strengthening the early warning system mechanism. Fourth, accelerating the sustainability agenda by developing Trans-ASEAN renewable energy derived from solar or hydro power, as well as promoting the development of an electric vehicle ecosystem and a regional blue economy framework,” Airlangga Hartarto added.

These strategies can drive Indonesia’s growth and strengthen synergies with ASEAN member countries in a sustainable manner. Growing in the right direction for a better future and maintaining relationships with neighboring countries are two things that need to be done consistently to achieve mutual growth with Indonesia as the main driver.

Indonesia is experiencing a strong recovery in consumption purchasing power, high investment growth, and satisfactory export performance. Indonesia’s fiscal condition is also relatively healthy with increased revenue and efficiency of state spending. As a result, macroeconomic conditions are stable, the inflation rate is under control, and the rupiah exchange rate has strengthened.”

Additionally, the government is creating breakthroughs that will have an impact on national economic growth and Indonesia’s resilience in facing future crises. For example, the agriculture and mining sectors will increasingly focus on processing commodities such as palm oil, bauxite, copper, and tin into finished products with higher added value.

On a separate occasion, DBS Group Head of Research Maynard Arif predicted that Indonesia’s public consumption will grow in the second quarter of 2023, which will help to drive Indonesia’s economic growth. “According to our survey, people generally find inflation a challenge as they are affected by price hikes of more than 10 percent so many people choose to ‘save more, spend less’. However, we are optimistic that public consumption will increase ahead of Eid al-Fitr for a number of reasons such as the provision of religious holiday allowances (THR) and the easing of social restrictions, including the mudik (homecoming) policy.”

This year’s Asian Insights Forum, with the theme “Indonesia’s Pivotal Role to ASEAN Economy”, was held to underline Bank DBS Indonesia’s support for Indonesia in dealing with global challenges and to welcome Indonesia’s ASEAN Chairmanship 2023. The event presented the views of practitioners and observers in the field of economics, business, politics and the environment to provide accurate information and in-depth discussions that can be used by customers, partners, and the public

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Eid al-Fitr has positive impact, here are the keys to Indonesia’s sustainable growth as recession looms