The Central Statistics Agency (BPS) stated that Indonesia's economic growth last year managed to reach 5.02%. Although higher when compared to other countries, this figure is considered stagnant.
How could it not be, economic growth in the last 5 years has always been at the same level. For that, the Government of President Prabowo Subianto is targeting a fairly ambitious growth of 8%, a figure that was last achieved in 1996, reported by Bloomberg.
This target has so far been achieved in various ways, including building more public housing, attracting more foreign and domestic investment, and distributing free meals.
Prabowo also agreed to a larger than expected increase in the minimum wage, then reduced this year's tax increase, and provided economic stimulus such as electricity discounts this month.
Meanwhile, Indonesia's obstacles in the last 10 years have been triggered by several factors such as exchange rate pressure in the import sector, price increases after inflation, and high interest rates. Then, according to PT Bank Danamon Economist Hosianna Evalita Situmorang, the threat of a US trade war could hamper the revival of Indonesia's export sector.
Meanwhile, to meet the 8% GDP expectation, Coordinating Minister Airlangga Hartarto said the government's strategy to maintain economic growth includes encouraging the downstreaming of natural resources (SDA), reducing the Incremental Capital Output Ratio (ICOR), and providing educational facilities.
However, an economist from the Australia and New Zealand Banking Group said the main obstacle for Indonesian households is their ability to rebuild the economic sector weakened by the pandemic.
He also suggested that Indonesia focus on welfare-centered spending and the decision to limit VAT increases on luxury goods and luxury services, so that consumption will continue to be boosted.
-# Image Source: Bloomberg
