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Indonesia’s economic recovery expected to persist in 2022: UOB
UOB on Tuesday (Feb 8) said it believes economic recovery in Indonesia will persist in 2022 on expected growth in investment demand and the continued strength of exports.
The research house keeps its forecast for the country’s 2022 baseline economic growth at 5 per cent, within a range of 4.7-5.3 per cent to reflect ongoing uncertainty of the economy reopening as well as to factor in the risk of slower economic growth due to Omicron.
UOB anticipates the increase in investments to be supported by rising foreign direct investment (FDI) and government efforts to ease business licensing. This comes on the back of the country’s total investments amounting to 901 trillion rupiah (S$84.1 billion) in 2021, a 9 per cent increase from 2020.
Economic recovery will also be maintained by the acceleration of National Economic Recovery fund disbursements, UOB said. The research house expects strong export growth to continue from the higher demand from trading partners and firmer commodity prices.
Concerns on fiscal consolidation returning to its 3 per cent deficit cap in 2023 have also been factored in. UOB has allocated a smaller contribution from fiscal spending into Indonesia’s economy in 2022.
The research house noted that the Covid-19 Omicron variant and the recent government announcement placing higher restrictions on economic activities may pose downside risks to its Q1 2022 outlook.
However, Indonesia has reported high levels of Covid-19 vaccinations across its economic areas, which the research house believes has allowed the country to reopen more “durably”.
It highlighted that the Indonesia economy grew by 3.7 per cent in 2021, higher than UOB’s projection of 3.5 per cent. Indonesia’s economic growth was also well supported by the strengthening of investment and exports and the continuous recovery in consumption, UOB added.
Source: https://www.businesstimes.com.sg/asean-business/indonesias-economic-recovery-expected-to-persist-in-2022-uob