Langgam Pos - Indonesia's economy has continued to show impressive resilience, growing by 5.05% in the second quarter of 2024 compared to the same period last year. This growth is supported by several key factors, including monetary policy and domestic economic activity.
According to Moh. Edy Mahmud, Deputy for Balance and Statistical Analysis at the Central Statistics Agency (BPS), the Gross Domestic Product (GDP) of Indonesia at current prices reached IDR 5,536.5 trillion in Q2 2024, while at constant prices, it amounted to IDR 3,231.0 trillion.
The strong economic performance is attributed to robust domestic economic activities despite geopolitical tensions in the Middle East. The country's economy has maintained a stable growth rate of 5.08% for the first half of 2024.
Consumer purchasing power remains strong, as evidenced by a 1.14% year-on-year increase in retail sales and a 4.21% rise in domestic motorcycle sales. Additionally, there has been an uptick in mobility, indicated by higher passenger numbers across various transportation modes.
Monetary policy has also played a crucial role in supporting economic performance. The decision to keep the interest rate at 6.25% has helped control inflation, contributing to stable economic growth.
S&P Projects Indonesia’s Economic Growth to Remain Around 5%
On July 30, 2024, Standard & Poor's (S&P) reaffirmed Indonesia's Sovereign Credit Rating at BBB, one notch above investment grade, with a stable outlook. S&P’s positive outlook reflects confidence in Indonesia’s economic prospects, external resilience, and manageable government debt, supported by credible monetary and fiscal policies.
Bank Indonesia Governor Perry Warjiyo welcomed S&P’s affirmation, noting that it strengthens the confidence of major rating agencies such as Fitch and Moody's, which had previously affirmed Indonesia’s rating earlier this year.
Warjiyo emphasized that the affirmation underscores international confidence in Indonesia’s economic prospects and the effectiveness of coordinated policy measures by the Government and Bank Indonesia. He reaffirmed Bank Indonesia's commitment to maintaining macroeconomic stability and financial system resilience in the face of global uncertainties.
S&P projects Indonesia's average economic growth over the next three to four years to remain around 5.0%, driven by robust domestic demand, increased government spending, and rising private investment.
The agency also noted that external sector resilience is expected to be maintained in the medium term, supported by export growth due to downstream policy implementation amid commodity price weaknesses.
Government Commitment Receives Praise
S&P has also praised the Indonesian Government's commitment to maintaining inflation within target ranges since 2010. For 2024-2025, S&P forecasts inflation to be around 2.8% and 3.0%, respectively.
Furthermore, S&P commends the pro-market monetary policy innovations and the use of market-based instruments, which enhance policy flexibility. On the fiscal front, S&P views the Government’s commitment to keeping the fiscal deficit below 3% of GDP as positive.
Overall, S&P believes the new administration will continue to focus on policy sustainability to preserve credibility and avoid significant economic and financial disruptions.
S&P Projects Indonesia’s Economic Growth to Remain Around 5%
On July 30, 2024, Standard & Poor's (S&P) reaffirmed Indonesia's Sovereign Credit Rating at BBB, one notch above investment grade, with a stable outlook. S&P’s positive outlook reflects confidence in Indonesia’s economic prospects, external resilience, and manageable government debt, supported by credible monetary and fiscal policies.
Bank Indonesia Governor Perry Warjiyo welcomed S&P’s affirmation, noting that it strengthens the confidence of major rating agencies such as Fitch and Moody's, which had previously affirmed Indonesia’s rating earlier this year.
Warjiyo emphasized that the affirmation underscores international confidence in Indonesia’s economic prospects and the effectiveness of coordinated policy measures by the Government and Bank Indonesia. He reaffirmed Bank Indonesia's commitment to maintaining macroeconomic stability and financial system resilience in the face of global uncertainties.
S&P projects Indonesia's average economic growth over the next three to four years to remain around 5.0%, driven by robust domestic demand, increased government spending, and rising private investment.
The agency also noted that external sector resilience is expected to be maintained in the medium term, supported by export growth due to downstream policy implementation amid commodity price weaknesses.
Government Commitment Receives Praise
S&P has also praised the Indonesian Government's commitment to maintaining inflation within target ranges since 2010. For 2024-2025, S&P forecasts inflation to be around 2.8% and 3.0%, respectively.
Furthermore, S&P commends the pro-market monetary policy innovations and the use of market-based instruments, which enhance policy flexibility. On the fiscal front, S&P views the Government’s commitment to keeping the fiscal deficit below 3% of GDP as positive.
Overall, S&P believes the new administration will continue to focus on policy sustainability to preserve credibility and avoid significant economic and financial disruptions.
(*)
