Indonesia Economic Forecasting 2021
January 25, 2021

Morgan Stanley (2020) assumed that Indonesia could get out from the crisis rapidly because the Indonesian economy is more domestic-oriented and has minimal exposure to global supply chains. Indonesia is in the second group of countries affected by a lower recession due to high structural growth, while China is in the first group. Stanley’s assumption could happen if this pandemic did not worsen by the end of 2020, however the addition of positive cases in Indonesia at the end of the year has increased significantly.
Despite the increasing positive cases of Covid-19, Indonesian government remains optimistic that Indonesia’s economy in 2021 will show significant improvements. This was conveyed in the Ministry of National Development Planning or Bappenas projections for the fourth quarter of 2020 continuing the economic recovery. In the last three months of 2020, the contraction of economic growth was predicted to be lower, hoping towards positive in spite of its contraction still. This is due to refocusing, budget-reallocating for non-priority activities, and providing the stimulus package as mitigation for the Covid-19 pandemic by the Government in order to improve the Indonesian economy.
The Government Work Plan 2021 focuses a lot on accelerating economic recovery and social reform. One of the strategies is to encourage the improvement of economic engines, such as industry, tourism, and investment for employment and other related businesses. The Government will endeavor for Indonesia to be named Upper-Middle Income Countries. The Government projected that in 2021, economic growth will rely on accelerating investment with an increased target of 6.4 percent.
The Government has prepared some steps to increase investment in Indonesia by finalizing the Bill of Tax Provisions and Facilitation, providing facilities for easy access to bank loans, providing facilities for investment such as accelerating business licensing in ministries through the integrated Online Single Submission system, providing the ease for export-oriented investment, to the fulfillment of domestic and export raw materials.
The improvement of global economy has made the Government optimistic that the increase in exports of goods and services is predicted to reach 4.5 percent in 2021. The number of increasing public consumption is targeted at 4.7 percent, supported by the low inflation rates, the expansion of social funds, and the allocation of Pre-work Cards (Kartu Prakerja). The Government’s consumption is also targeted to increase 6.2 percent with the easing of the budget deficit regulation that continues until 2021. The target of increasing imports of goods and services will also grow, predicted by 5.9 percent, strengthened by domestic economic activity. The Government’s effectiveness in responding to the pandemic situation and in formulating the right policies is key to the road to economic recovery.
Latest News
-
Global Minimum Tax How PMK 136/2024 Affects Multinational Enterprises in Indonesia14 Feb 2025
-
Indonesia Officially Joins BRICS: Benefits and Opportunities08 Jan 2025
-
A Comprehensive Guide to Indonesia’s New VAT Policy02 Jan 2025
-
Bank Indonesia Maintains Interest Rate at 6% to Close 2024: Implications for Businesses and Investments19 Dec 2024
-
Reanda International Members Meeting 2024 – Day 2: Cohering for a Novel Future17 Dec 2024
-
Reanda International Members Meeting 2024 – Day 1: Cohering for a Novel Future17 Dec 2024
-
Airlangga Hartarto Highlights Economic Resilience Amid VAT Increase16 Dec 2024
-
Sri Mulyani Announces the Increase of VAT Rate to 12% Starting January 1, 202516 Dec 2024
-
China's Massive 2025 Stimulus: Impacts on Indonesia and the Role of Reanda Bernardi12 Dec 2024
-
Reanda’s delegation visited the Embassy of the People’s Republic of China in the Republic of Indonesia (“China Embassy”)09 Dec 2024