Owing Steady Recovery to Indonesia’s Accommodative Public Measures
After a year of socio-economic hardship induced by the COVID-19 pandemic in 2020, the Indonesian economy has gradually rebound since the third quarter of last year. The country’s GDP is expected to grow at 4.8%, following the -1.9% contraction last year. This optimistic forecast reflects a recovery in private sector demands, increasing public investment, and reopening the economy as the pandemic situation eases.
Albeit uncertainties regarding the pandemic still lingers--the country recorded over 38.000 fatalities in March 2021, the highest numbers in the Asia Pacific region.
Market Research Indonesia finds that solid government support and global demand improvements would likely retain their role as the critical factors driving positive growth for the upcoming year.
2021 Economic Outlook
The government has planned an expansionary fiscal policy posture for 2021 alongside the increase in public investment. The stance involves committing to set the budget ceiling of 3 percent of the GDP by 2023, provide monetary accommodation through low policy interest rates and government bond purchases, and be proactive towards loan loss provisioning as a restorative act for struggling private sectors.
Indonesia's short-term outlook would most likely rely on its government's public measures, including a widening COVID-19 vaccine rollout and the closely associated increase in economic activity. However, the country's recent passing of the omnibus bill on job creation could become a revolutionary stepping stone towards a surge of investments as the global crisis ends.
However, Indonesia's medium-term outlook seems more agile and rigorous than the current dependency on government spending and stimulus policies.
As the country coherently prioritizes a macro-structural reform strategy for Indonesia's medium-term goals, integrating a digital economy and focusing on financial inclusion as its attempt to address the root cause of the country's volatile performance.
In addition, the reform would allow the government to increase spending on the long-due developments nationwide sustainably.
Market Research Indonesia assists industry players in identifying sustainable growth strategies within Indonesia's multitude of industries, providing a grip of understanding towards the opportunities and potentials beyond the surface level.
Our engagements usually range from market entry strategies, competitive benchmarking, channel model identification, market assessments, M&A, and partner due diligence--without limiting one from the other.
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