The Indonesian government has lowered the country’s economic growth forecast for 2016 to between 5.5% and 6% from between 5.8% and 6.2% previously.
A Ministry of Finance release said the government and the House of Representatives made the revised outlook on June 22 after agreeing on “basic assumptions of indicative macro economy” for the draft budget of 2016.
“Dynamic global economic development” was one of the reasons cited for the target revision.
Finance Minister Bambang Brodjonegoro said the revision was based on next year’s economic prospects and the weak economic growth this year.
Bambang said the 6% growth forecast is based on an optimistic assumption of supportive global economic conditions, while 5.5% “is the worst case, just like the first quarter this year.”
“Economy changes so fast. Previously, it was affected by US interest rate issue, now it shifts to Greek issue as the global issue,” explained the minister.
He added that, next year, the global economy will be “in a period full of uncertainty,” and that the government is monitoring the impact of the Greek conundrum on the global economy.
“Today, we have to pay attention to what happens in Greece. Because if it doesn’t go well, it will affect global economy and global financial market stability,” said the state official.
Both the World Bank and the International Monetary Fund see Indonesia’s economic growth in 2015 at 4.7%, partly on the country’s weak export performance.
Bank Indonesia Governor Agus Martowardojo has also stated separately that the country’s exports in 2015 are expected to decline 14% to $151.6 billion, a steeper fall than the central bank’s earlier projection of negative export growth of 11%. In 2014, Indonesia’s exports were down 3.43% year-over-year to $176.3 billion.
The archipelago’s decline in export activity is being hastened particularly by the economic slowdown in China, one of its key merchandise export markets.
Photo: Randi Ang
