Launch of World Bank’s Indonesia Economic Prospects Report December 2022 Edition

On 15 December 2022, EuroCham attended the Launch of the World Bank's Indonesia Economic Prospects Report December 2022 Edition. According to the latest edition of the Indonesia Economic Prospects (IEP) report, Indonesia's economic conditions remain stable amid shocks at the global level. Indonesia is projected to experience a robust growth of 5.2% in 2022, thanks to post-COVID-19 economic reopening and rising commodity prices, with growth expected to maintain an average of 4.9% over the medium-term (2023-25).

However, the growth prospects still face significant downside risks. Weaker global demand, tighter global financing conditions, capital outflows and currency pressures could trigger a quicker monetary policy tightening than expected. Indonesia can maintain strong growth and overcome potential challenges ahead through several initiatives, according to the IEP report entitled Trade for Growth and Economic Transformation.

Continuing to implement tax reforms will help create space for investment and build resilience to shocks. Shifting to a regulation-based pricing model for energy can withstand subsidy pressures. Social safety net programs could be targeted more effectively and expanded to provide guaranteed minimum protection throughout the life cycle. “Indonesia's social protection system can help households manage increased risk and volatility due to external conditions, but needs to be strengthened to fill remaining coverage and inclusion gaps,” according to the World Bank’s Director for Indonesia and Timor-Leste, Satu Kahkonen.

Reforms to non-tariff trade measures such as import approvals and port-of-entry restrictions can deliver significant economic benefits and boost growth by up to 5 percent. Commitments to trade agreements that go beyond traditional market access and cover a wide range of regulations, including competition policy, intellectual property rights and environmental protection, can further enhance Indonesia's trade. Trade reforms could open up opportunities for Indonesia to capitalize on the growing demand for goods and technologies to reduce carbon emissions, support the climate transition, and access cheaper and higher-quality green products and services. The World Bank's Chief Economist for Indonesia and Timor-Leste, Habib Rab stated that, “A supportive trade policy framework can play an important role in driving Indonesia's economy's long-term growth and transformation. Targeted reforms to reduce trade-related barriers, improve market access, and address domestic barriers will be key to realizing this potential.” .

Numerous prominent speakers also attended to the launching, including: Sri Mulyani Indrawati (Indonesia’s Minister of Finance), Stephen Scott (Chargé of the Australian Embassy to Indonesia), Kasan Muhri (Head of Trade Policy Agency of the Indonesian Ministry of Trade), Csilla Lakatos (Senior Economist, World Bank), Johnny Darmawan, (Manufacturing Industry Chairman of APINDO), Lili Yan Ing (Lead Advisor (Southeast Asia Region) of ERIA), and Wael Mansour (Senior Economist from the World Bank.

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