IMF downgrades Indonesia’s 2022 GDP growth to 5.4%

• Mar 23, 2022

[JAKARTA] The International Monetary Fund (IMF) has trimmed its economic growth forecast for Indonesia in 2022 to 5.4 per cent, down from 5.6 per cent previously, it said in a statement on Wednesday.

The IMF kept Indonesia’s 2023 growth forecast at 6 per cent in its so-called Article IV assessment and described South-east Asia’s biggest economy as “recovering at a brisk pace” from the impacts of the Covid-19 pandemic.

The Washington-based organisation had given the 5.6 per cent 2022 growth projection in its staff report for Article IV on Jan. 26.

Wednesday’s statement is the version of that assessment that the IMF board has approved.

The new statement did not explain the downgrade, but it repeated that Indonesia’s growth was supported by favourable global commodity prices, the easing of Covid-19 restrictions and rising mobility amid vaccination efforts and continued policy support. It noted that risks remained tilted to the downside.

Indonesia’s economy grew 3.7 per cent in 2021.

The IMF commended Indonesia’s pandemic policy response and plans to restore a fiscal deficit ceiling of 3 per cent of gross domestic product in 2023, but urged the central bank to end bond purchases in the primary market – something that Bank Indonesia (BI) has been doing since 2020 to help limit the government’s interest costs on debt.

BI, in a statement in response to the assessment, said the IMF’s recommendations and economic projections were in line with BI’s policy direction and its own assessment of Indonesia’s economic recovery. REUTERS