Indonesia Economic Kaleidoscope 2021: Optimism of the Indonesian Economy in the Future from the Viewpoint of the State Budget, Financial Sector, and Real Sector

On Monday (22/11/2021), the Economics Development Lab and the Banking Lab held a webinar “Indonesian Economic Kaleidoscope 2021: Optimism of the Indonesian Economy for the Future from the Viewpoint of the State Budget, Financial Sector, and Real Sector”. Preventing the emergence of the third wave of Covid-19 is one of the main keys to Indonesia’s economic recovery. This condition could make the pace of growth which is now starting to stagnate again.

The Finance Ministry’s Budget Director, Purwanto, said that the uncertain world conditions due to Covid-19 still pose challenges to economic recovery, including Indonesia. Now, a number of activities have been running, although not yet fully ideal. Some of the sectors that are thriving are manufacturing, nickel, and palm oil. Purwanto said that people’s consumption activities are also gradually improving, although they have not fully recovered.

“The consumer confidence index is at 96.5. People are still in between sure and not sure. If it is above 100, it is very strong, people dare to take credit and dare to shop. Now people only shop for basic needs,” he explained.

Purwanto also informed that sales of commercial vehicles grew 63.3 percent in September 2021. This is in line with increasing demand from the logistics segment, especially trucks and pickups.

The movement of the state budget is also not yet fully ideal. According to Purwanto, state spending was recorded at Rp 1,806 trillion as of October 22, 2021. Regional transfers and village funds grew minus 14.0 percent even though investment financing grew 172 percent.

“(State spending) is lower than the previous year by 1.9 percent,” he said. In the future, Purwanto said, his party remains aware of a number of possibilities, such as the weakening of the exchange rate and the potential for a third wave of Covid-19. The existence of the APBN, which must save when the economy is low, is now in a negative condition.

“We are maintaining growth, improving the economy, and targeting fiscal consolidation in 2023. Fiscal consolidation means that the ability of the state budget is maintained so that it is sustainable,” he said. Head of the Regional IV Financial Services Authority of East Java, Bambang Mukti Riyadi, added that the growth of gross domestic product (GDP) throughout 2021 was in line with sectoral credit growth. The manufacturing, trade, agriculture, forestry, fishery and construction industries are sectors that boost GDP growth and absorb large loans up to quarter III-2021. “The hope is that it will remain consistent with less than two months remaining this year,” said Bambang.

The CEO of Agra Guratama Raya Group of Company, Jamhari, said that in general, the furniture industry market experienced turmoil along with the phenomenon of the China-US trade war in 2018. China controls about 56 percent of the world’s furniture exporter market share, around 178 billion US dollars. While the US imports about another 18 percent. The impact is getting worse due to the pandemic.

According to Jamhari, the value of Indonesian furniture exports in 2020 had increased by around 18 percent. However, the phenomenon reversed in the first half of 2021 when the industry in China had recovered and began to restock the market.

“At that time, Indonesia was experiencing the second wave of Covid-19, so there were various restrictions on community activities,” he said. Head of the Laboratory of Economics Development and Development Studies, Faculty of Economics and Business Unsoed, Irma Suryahani hoped that the webinar could provide input for the Indonesian economy in the future. “There is a contribution of thought from the point of view of the State Budget, the financial sector, and the real sector,” he said.