Indonesia’s economy is projected to expand at its fastest pace in seven years in 2020, despite the deteriorating global outlook and rising risks of recession abroad, reported Bloomberg.
Coming after the government twice revised down its growth forecast for this year, it would mark Indonesia’s fastest expansion since 2013.
Sri Mulyani Indrawati, the Indonesian Finance Minister, said, “A prolonged and escalating trade war between the US and China has created uncertainties that are becoming more unpredictable.”
The government’s fiscal policies are aimed at keeping the economy growing above five per cent but realising growth next year of 5.3 per cent amid the global slowdown will be quite challenging and will face downside risks, said Indrawati.
President Joko Widodo is set to boost spending to a record level to bolster growth in Southeast Asia’s largest economy, which faces risks from waning global demand and the US-China trade war.
Government spending will rise to IDR 2,540.4 trillion ($180 billion) in 2020 while the president has pledged reforms aimed at attracting foreign investment and reversing a persistent trade deficit.
The parliament approved a budget deficit for next year of 1.76 per cent of gross domestic product, lower than this year’s revised estimate of 1.93 per cent and well within the legal limit of three per cent of GDP.
Indonesia’s economy grew 5.1 per cent in Q2 2019—its slowest pace since mid-2017 and has been struggling to grow much faster than five per cent for several years.