The ADB projects Indonesian economy will return to high growth. (Photo: Antaranews.com)Jakarta (VNA) - The Asian DevelopmentBank (ADB) has projected that the Indonesian economy will return to highgrowth, last seen in the pre-pandemic era, in 2022, with the economy forecastto expand 5 percent next year.
The bank also projected a 4.5-percent economicgrowth for Indonesia for 2021.
ADB Director for Indonesia Winfried Wickleinsaid on April 28 that Indonesia passed 2020 well thanks to a well-coordinatedand communicated crisis response, and strong leadership in tackling thepandemic.
Indonesia would return to its growth trajectorynext year, driven by a sustainable trade recovery, a revival in themanufacturing sector, and a large national economic recovery budget for 2021,he added.
Household spending in Indonesia is expected toincrease in 2021 as the vaccination programme advances and more economicsectors resume operations, he elaborated.
Besides, investment is expected to increaseagain with improving economic prospects, while the pace of recovery in financeor credit will still lag behind considering the uncertainty in investorsentiment, he said.
According to ADB estimates, inflation,which averaged 1.6 percent last year, will rise to 2.4 percent in2021. This inflation rate will still be within Bank Indonesia's targetrange as inflationary pressures due to currency depreciation and higher fooddemand will be partially offset by the decline in prices of goods set by thegovernment.
Furthermore, net exports supported by strongcommodity exports will result in a current account deficit of 0.8 percent ofIndonesia's GDP in 2021, according to the ADB.
As investment increases next year and volumes ofimported capital goods, such as machinery and equipment, increase, Indonesia'scurrent account deficit is expected to reach 1.3 percent of the GDP.
Wicklein said there are several risks to thisestimate, including disruptions to the global recovery due to the threat fromcoronavirus mutations, uneven vaccination rates in the world, and unexpectedglobal financial tightening.
Meanwhile at home, economic recovery could slowif there is a spike in COVID-19 cases during the month of Ramadan, or onaccount of delays in vaccination efforts and weakening government revenues, headded.
Therefore, ADB has recommended that Indonesiamobilise domestic resources and ensure environmentally friendly economicdevelopment./.
VNA
