Indonesia: Govt expects Indonesia to miss 2021 GDP growth target

  • The Indonesian government has acknowledged that the country’s gross domestic product (GDP) growth will likely fall below the initial target of 4.5% to 5.3% for 2021 following the enactment of emergency public activity restrictions (PPKM Darurat).
  • Iskandar Simorangkir, macroeconomy and finance deputy at the Office of the Coordinating Economic Minister, said the emergency restrictions would dampen consumption, investment and export growth, which collectively contribute over 80% of GDP.
  • “With the tightening of the mobility restrictions, it is likely that our economic forecast [for 2021] will be below 4.5% to 5.3%,” Iskandar said at a webinar.
  • Finance Minister Sri Mulyani Indrawati previously acknowledged that Indonesia would likely miss its 3Q21 growth target of 6.5% due to restrictions.
  • Concurring with the Office of the Coordinating Economic Minister, the Financial Services Authority (OJK) expects Indonesia to miss its loan disbursement target for this year as business closures dampen demand for new loans.
  • OJK chairman Wimboh Santoso said, also the regulatory body had downgraded its loan disbursement growth forecast from 7% to 6% due to the restrictions.
  • He said loan demand had also become inelastic over the past year, which meant that credit growth was unresponsive to benchmark rate cuts by Bank Indonesia.

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