Economist forecasts 4.9% national economic growth in 2023

Economist forecasts 4.9% national economic growth in 2023

Mandiri Sekuritas chief economist Leo Putera Rinaldy (second from left) at a press conference in Jakarta on Tuesday (January 10, 2023). (ANTARA/Sanya Dinda)

Jakarta (ANTARA) - Mandiri Sekuritas chief economist Leo Putera Rinaldy has forecast that the national economy will grow by 4.9 percent on an annual basis in 2023 on the back of public consumption.

"Indonesia's growth will slow down but will be manageable, growing 4.9 percent on an annual basis. The weakening will occur due to weakening exports and slowing investment," he said at a press conference here on Tuesday.

He predicted that exports will decline due to the normalization of commodity prices, while investment will slow due to an increase in the central bank's benchmark interest rate.

Public consumption is expected to grow 4–6 percent on an annual basis due to the simultaneous general elections, lower inflation, and growth in people's real income.

He estimated that the campaign for simultaneous general elections will contribute 0.6 to 1.3 percent to economic growth.

Meanwhile, the budget for the election is expected to be distributed in a concentrated manner in the second half of 2022.

In the meantime, inflation, which reached 5.5 percent in December 2022 on an annual basis, is estimated to have reached its peak so it is expected to fall and reach 4.0 percent, starting from the third quarter of 2023.

Inflation is projected to slide to 3.8 percent in 2023 due to the government's policy of partially subsidizing logistics costs for strategic food ingredients, which is expected to continue this year.

"Food prices in 2023 will also be under control, supported by more normal and neutral weather conditions," Rinaldy added.

Besides inflation, public consumption will also continue to grow supported by real income growth of 7.16 percent.

"This is important to support people's purchasing power. At the same time, the unemployment rate has also continued to decline," he said. 

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