Economists project that the Indonesian economy will remain resilient despite the global sluggishness

We estimate that the source of Indonesia’s economic growth in 2023 will most likely shift from the external sector to the domestic sector

Jakarta ( – Bank Mandiri economist Faisal Rachman projects that the Indonesian economy will remain resilient in 2023, despite sluggish global economic growth.

“We estimate that the source of Indonesia’s economic growth in 2023 will most likely shift from the external sector to the domestic sector,” said Faisal in the results of his study in Jakarta, Friday.

Thus, Faisal maintained Indonesia’s overall economic growth forecast this year at 5.04 percent on an annual basis (year-on-year/yoy), after BPS released economic growth data for the first quarter which reached 5.03 percent (yoy).

According to him, export activities appear to be weakening in line with the global economic slowdown led by the United States (US) and the eurozone. However, the reopening of China’s economy could support external demand to some degree.

On the other hand, commodity prices tend to continue to weaken, albeit gradually.

Household consumption in 2023 will be supported by declining inflation thanks to the government’s success in maintaining food supply and prices. The repeal of PPKM at the end of 2022 will also increase community mobility and demand.

In addition, he continued, government spending, which experienced a contraction in 2022 amid a decrease in spending on the National Economic Recovery (PEN) program due to the increasingly controlled COVID-19 situation, is expected to record growth again in 2023.

“Fiscal consolidation or the return of the fiscal deficit to below 3 percent of gross domestic product faster than planned will provide room for the government to return to pro-growth policies, including preparations for the 2024 elections,” he said.

Meanwhile, he said the source of gross fixed capital formation (PMTB) or fixed investment in 2023 will shift from non-building and structural investment, especially commodity-related investments, to building and structural investment, which is likely to occur in the second half of this year.

This is supported by an increase in the infrastructure budget in the 2023 State Revenue and Expenditure Budget (APBN), continuation of the national strategic project (PSN), downstream projects, and the construction of a new national capital (IKN).

Also read: Economists predict positive economic growth will continue into the second quarter
Also read: BPS: Indonesia’s economy grew 5.03 percent in the first quarter
Also read: Minister of Finance: Improvement in the workforce reflects the continued maintenance of the Indonesian economy

Reporter: Agatha Olivia Victoria
Editor: Click Dewanto


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