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[News] Indonesia's Growth Still Stuck At 5%
Posted at: 16 March 2020

As expected, Indonesia’s full-year 2019 economic growth came in well below the central government’s 5.3 percent year-on-year (y/y) growth target. Based on the data that were released by Statistics Indonesia (Badan Pusat Statistik, BPS) in early February 2020, the Indonesian economy expanded at a pace of 5.02 percent (y/y) in 2019.

Indonesia's economic growth has remained (stubbornly) close to the 5 percent (y/y) growth level; a level that is considered not high enough for the country to avoid the middle income trap. Indonesia’s 2019 gross domestic product (GDP) growth figure was also slightly below Indonesia Investments’ (revised) growth projection of 5.05 percent (y/y).

A consequence of the 5.02 percent (y/y) growth pace of Indonesia in 2019 is that it effectively ended the country’s three-year period of (slowly) accelerating economic expansion. After touching a low of 4.88 percent (y/y) in 2015, Indonesia’s economic growth managed to accelerate modestly in the 2015-2018 period. Now, however, Indonesia will need to face at least two years of economic slowdown (because growth is bound to ease further in 2020 due to the novel coronavirus outbreak).

To escape the new normal it is important for Indonesia to impose structural reforms. The government now seems to bet on the two omnibus bills to strengthen Indonesia's business and investment environments structurally.

(source: Indonesia Investment)