Finance Minister Ensures Indonesia’s Economy Remains Strong Amidst Global Challenges

Finance Minister, Sri Mulyani

The Indonesian Finance Minister, Sri Mulyani Indrawati, has assured that Indonesia’s economy is still in good shape amidst the ongoing global economic uncertainty.

In a press conference on Monday, April 17, 2023, she stated, “Our economy is still relatively strong amidst the many challenges facing the world, and we are grateful for that.”

Several indicators demonstrate Indonesia’s economic strength, including a Manufacturing Purchasing Managers’ Index (PMI) of 51.9 in March 2023, which means it is still expanding, and stable growth in electricity consumption.

“Consumption activities have a strong trend, with car sales above the 2019 average by 2.6%, while motorcycle sales in March increased by 40.5% compared to 2019,” she explained.

The Consumer Confidence Index also remains relatively stable, reflecting the purchasing power of the Indonesian population. “With the confidence of consumers, our investment growth is stable, and our trade account is in surplus. Even the International Monetary Fund (IMF) revised its projection upwards to 5% from the previous 4.8% due to the improving economic conditions in March,” said Sri Mulyani.

“However, we remain cautious as the world is still experiencing uncertainty,” Sri Mulyani emphasized.

The Finance Minister further explained that Indonesia’s domestic economic growth is predicted to reach between 5% and 5.3% in 2023. “Indonesia’s economy is still relatively stable, with the exchange rate appreciating (strengthening) by 5.6% year to date (in 2023),” said Sri Mulyani at the APBN Kita press conference on Monday, April 17, 2023.

Sri Mulyani also stated that Indonesia’s Credit Default Swap (CDS) level remains stable and tends to decrease, indicating investors’ improved perception of the country’s risk. CDS is a derivative product in the form of a financial contract that allows investors to eliminate or reduce their business risks to another party by paying a premium based on the agreed-upon amount. CDS is an insurance contract provided in the event of default on a debt.

“After The Fed’s policy in March, which raised interest rates by 25 basis points, UST yields remain relatively stable. Market consensus projects the Fed Fund Rate to be around 5% throughout 2023 and will decline in 2024,” Sri Mulyani explained.

As we know, after strengthening significantly for five consecutive weeks, the rupiah weakened significantly against the US dollar at the start of trading on Monday, April 17, 2023. Refinitiv data showed that the rupiah opened trading down 0.24% before declining by 0.51% to Rp 14,770/US$ at 9:04 AM WIB.

The Indonesian government’s efforts to support the economy during the pandemic have had a positive impact, but the continuing global economic uncertainty requires vigilance. Nonetheless, the Finance Minister’s statement on Indonesia’s relatively stable economic situation provides some reassurance to investors and the Indonesian public.