Indonesian Budget 2022: 5.5% GDP growth, 4.85% budget deficit in 2022

  • The government expects an acceleration of economic growth and a narrower budget deficit in 2022 in line with its fiscal consolidation plan. President Joko “Jokowi” Widodo said the country’s GDP was projected to grow by between 5 and 5.5% in 2022.
  • While lower than an earlier Finance Ministry projection of between 5.2 and 5.8%, that range suggests a significant improvement over growth expected for 2021.
  • The resurgence in COVID-19 cases and deaths, which was driven largely by the highly transmissible Delta variant of the coronavirus, has forced the government to lower the growth projection for 2021 to between 3.7 and 4.5% from 4.5 to 5.3%.
  • In 2Q21, the economy grew by 7.07% y/y, largely because of the base effect and seasonal factors
  • The government’s goal to get roughly 70% of the population vaccinated is projected to be reached in 2H22.. Economic growth had been supported by strong exports but there was a sign of a slowdown in China’s imports.
  • The President also said that the government projected a budget deficit of 4.85% of GDP. That would be equivalent to nearly IDR880tr (USD61.16bn), according to a Finance Ministry estimate.
  • According to a previous Finance Ministry estimate, the country’s fiscal deficit would stand between 4.51 and 4.85% of GDP in 2022.
  • For 2021, the government has kept its deficit-to-GDP target at 5.7% despite raising the COVID-19 stimulus budget by 6.5% to IDR744tr. That would mark a narrowing deficit from 6.1% in 2020.

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