Widodo: Indonesia’s Economy is Better than Other Emerging Markets!
Indonesian President Joko Widodo is optimistic about the future of Indonesia’s economy despite global economic slowdown. He said that Indonesian economic growth is better than other emerging markets.
“I think 4.7 to 4.9 percent is much better than other countries. Some of them even experience negative growth,” said Widodo in his closing remarks at Kompas 100 CEO Forum at JCC, Jakarta, Thursday, November 26, 2015.
Widodo added that economic downturn poses a number of challenges and opportunities to Indonesia. For example, Indonesia should take advantage of its decision to join international trade agreements such as Trans Pacific Partnership and free trade agreement (FTA) with the European Union to boost the country’s exports. Domestic industry should use the country’s lack of competitiveness relative to other countries such as Malaysia and Singapore as a motivation to improve their productivity.
Meanwhile, Minister of National Development Planning Sofyan Djalil said that the country’s lack of infrastructure should be seen as growth opportunities. At the time when other countries are searching hard for alternative growth source, Indonesia is able to use government investment in this sector.
Muliaman D. Hadad, Chairman of the Board of Commissioners of Financial Services Authority (OJK) also agreed that Indonesia’s economy is comparatively better than other countries. This can be seen from the increase in household consumption and government investment.
×Powered By CapricornusOther indicators include lower year to date inflation rate of 2.16 percent compared to last year of eight percent and a surplus balance of trade. Domestic banks’ capital adequacy ratio (CAR) of 20.62 percent as of September 2015, which is higher than the international minimum standard of eight percent, is another indicator because this means that their lending capacity is still high. The same holds true for loan disbursement that increases by 11.1 percent and loan to debt ratio (LDR) that downs by 88.54 percent.
Muliaman, however, admitted that the industry’s appetite for expansion is declining. Nevertheless, he expected “the economy to grow higher in 2016. So are lending and third party funds. These will provide an opportunity for the financial industry to expand.”