INDONESIA POST PANDEMIC ECONOMIC GROWTH REMAINS SOLID

Islamabad: Online Internship Program being jointly organized by the Indonesian Embassy and the Bahria University, Islamabad with speaker Anastuty Kusumowardhani at its 5th session explored “Central Bank’s role in maintaining financial stability during crisis” on Monday, August 01, 2023.

The speaker who is the Head of Bank Indonesia Representative Office in Singapore, began her lecture with the history of Bank of Indonesia in carrying out its duties as the central bank and said that it has undergone an evolution of functions and duties since 1963 and outlined the task and role of the central bank of Bank.

“Bank Indonesia is committed to become the foremost digital central bank that creates tangible contribution to the national economy and be the best central bank amongst emerging market countries towards an advanced Indonesia” the speaker underscored.

Sharing achievements and experiences, the speaker underlined Bank of Indonesia’s role in maintaining financial stability during the COVID pandemic and highlighted the policy synergy between the bank and government that expedited the economy recovery.

Regarding, the implementation of the Indonesian National Economic Recovery Program (PEN), she praised President Jokowi guidance on key legislation through PERPPU No 1 of 2020 and highlighted the importance of data availability and quality in policy formulation, coordination between central and regional governments, armed forces, and increased efficiency through digital technology in achieving recovery program targets, she added.

About recent economic development, the speaker expressed confidence and said that “economic growth in Indonesia remains sold and the domestic economy in the second quarter of 2023 is expected to outperform with annual growth being projected at 4.5-5.3% range underpinned by higher household consumption and investment”.

About investment in the country, she informed that it was on the rise in line with the positive export performance and ongoing down streaming efforts. “I express my great optimism that investor perception concerning the national economic outlook is also improving as reflected by an upgrade to Indonesia’s sovereign credit rating by the R&I rating agency from a stable to positive outlook with a BBB+ rating”, the speaker added.

In her presentation Anastuty Kusumowardhani said that Indonesia’s BOP continues to support external resilience as the trade balance in the second quarter of 2023 recorded a narrower surplus due to lower international commodity prices and global economic moderation. Regarding reserve assets, she mentioned that at June 2023’s end they were $137.5 billion, equivalent to 6.1 months of imports. BOP performance is expected to remain sound, with a manageable current account and capital and financial account supported by FDI and portfolio investment, she added.

“The inflation has returned to the target earlier than previous projected and predicted to remain under control at 3% this year and 2.5% in 2024 with ample liquidity at 27.5% in June 2023 positively impacting interest rates in the banking industry”, the speaker shared with participants.

About Bank Indonesia’s policy mix direction in 2023-2024, the speaker inform the participants of the OIP that Bank Indonesia stays committed to stimulating bank lending/financing on the supply side to accelerate sustainable economic growth. “The Bank Indonesia monetary, macro prudential and payment system policy mix will is focused on sectors with stronger multiplier effect on economic growth and job creation, particularly in downstream sectors such as mineral and coal mining, agriculture, livestock, housing sector, tourism, inclusive sectors including MSME loans, people business loans and as well as the green economy and finance” she elaborated.

Making special reference to digital economic and financial transactions she said that “Bank Indonesia continues accelerating payment system digitalization for greater economic and financial inclusion and cross border cooperation”, the speaker concluded.