Indef projects Indonesia's economic growth at 2.5-3 percent in 2021

Indef projects Indonesia's economic growth at 2.5-3 percent in 2021

Deputy Director of the Institute for Development of Economics and Finance (Indef) Eko Listiyanto. ANTARA/Citro Atmoko.

Jakarta (ANTARA) - Institute for Development of Economics and Finance (Indef) Deputy Director Eko Listiyanto forecast Indonesia's economic growth in 2021 at 2.5-three percent since financial and real sectors were estimated to still operate at half capacity.

"If it is still half of the normal capacity, the government's target of five percent in 2021, cutting it in half by 2.5-3 percent is more realistic," Listiyanto stated during the 2021 RI economic webinar in Jakarta, Wednesday.

Listiyanto believes several challenges will present themselves in 2021, including related to vaccination, which is expected to boost the economy, but uncertainty loomed over the COVID-19 vaccination being conducted in the first semester.

The Indef deputy director explained that handling a pandemic was the key, especially in economic recovery.

Meanwhile, the 2020 inflation target is estimated to lie in the range of three percent, even below two percent.

Furthermore, he estimated that the realization of credit disbursement in 2021 would be choked up, and monetary expansion could not then be bigger since the rupiah was more volatile than other countries in the ASEAN.

"Hence, to reduce the fluctuating tensions, the interest rate should be set attractive, so that it cannot expand rapidly," he stated.

Even so, several indicators in the third quarter of 2020, including the Indonesian manufacturing index (PMI), began to improve, from 27.5 in March to 47.2 in September 2020.

According to the Central Statistics Agency (BPS), Indonesia's economic growth in the third quarter of 2020 was expected to contract by 3.49 percent, or an improvement from the contraction of 5.32 percent in the second quarter of 2020.

The government estimates that overall, in 2020, Indonesia's economic growth will reach -1.7 percent to -0.6 percent.

Earlier, in the macroeconomic assumptions of the 2021 State Budget, the government had targeted Indonesia's economic growth to lie in the five-percent range in 2021.
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