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Indonesia's Economic Growth in the 2nd Quarter is Predicted to Reach 7 Percent

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Indonesia's economic growth in the second quarter of this year will be on the positive track. Coordinating Minister for Economic Affairs, Airlangga Hartarto, in a press conference on Saturday (15/5) estimated that Indonesia's economic growth could reach 7% this year. According to Minister Airlangga, the economic recovery has been seen from the Purchasing Manager's Index -PMI which reached 54.6. The Consumer Confidence Index -IKK is also close to normal figures. Currently, it has reached around 90 to 100. He also said that Indonesia's export and import performance growth has returned to a positive direction. The government spending also experienced the same thing. Several sectors, such as information, communication, health services, agriculture, property and industry, with the Luxury Value Added Tax (PPNBM) borne by the government and other policies, made quite a high increase. Gross Fixed Capital Formation (PMTB) is close to 0% or now minus 0.23%. Meanwhile, exports reach 6.74%. In fact, this is higher than before Covid-19. Imports of capital goods and production were recorded at 5.27%.

Meanwhile, the ASIAN Development Bank -ADB at the end of last month estimated that Indonesia's economic growth in 2021 would reach 4.5%. Economic growth will also increase in 2022 to 5% amid the national and global economic recovery. According to ADB's Director for Indonesia, Winfried Wicklein, with the continued recovery of trade, the revival of the manufacturing sector and a large national economic recovery budget for 2021, ADB is also optimistic that Indonesia will return to its growth track next year. This can be realized as the Covid-19 vaccination program progresses and more sectors of the economy are back in operation. In addition, investment is also expected to increase, along with improving economic prospects. However, the pace of recovery in financing or credit will still lag behind due to the uncertainty of investor sentiment. Inflation, which reached an average of 1.6% last year, is estimated to rise to 2.4% in 2021, or before falling again to 2.8% in 2022. This inflation rate is still within Bank Indonesia's target range, due to inflationary pressures, currency depreciation and higher food demand.

There are, of course, some significant risks to this estimate. Economic recovery can slow down if there is a spike in Covid-19 cases during Ramadan and Idul Fitri holidays. From the news in the media, the government has tried hard to ban people from going home in a bid to reduce the rate of transmission of the Covid-19. But in fact, there were millions of people who went to their hometowns or villages. In addition, delays in vaccination efforts, especially during Ramadan and the government’s weak revenues can also bring about a significant impact on achieving economic growth forecasts in the second quarter of this year.

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