Indonesia 2023 GDP Growth May Slow To 4.4%

DigitalCFO Newsroom | 21 November 2022

Indonesia’s annual economic growth may slow to 4.37 per cent next year partly due to the impact of domestic monetary tightening.

Indonesia’s annual economic growth may slow to 4.37 per cent next year partly due to the impact of domestic monetary tightening, the country’s central bank (BI) governor told a parliamentary hearing on Monday. In last week’s policy meeting, BI maintained 2022 GDP growth forecast biased toward the upper end of 4.5 per cent to 5.3 per cent.

BI Governor Perry Warjiyo gave the GDP forecast as part of a discussion with parliament on the central bank’s 2023 budget. Warjiyo said predicting economic indicators was difficult due to volatility in the global economy, adding that the numbers could be discussed further with lawmakers. The governor also gave a headline inflation forecast of 6.11 per cent for end-2022 and 3.61 per cent for end-2023 at the hearing. His presentation showed the figure for 2022’s inflation were BI’s forecast as of Nov. 3.

Warjiyo last week said BI expected a headline inflation rate of 5.6 per cent at the end of the year. He did not explain why the figures were different and BI’s spokesperson did not immediately respond to a request for comment. Last week, BI raised its key policy rate for a fourth consecutive monthly meeting in a move aimed at anchoring inflation expectations, which the governor said was “too high”. In total BI has lifted interest rates by 175 basis points since August.

Indonesia’s annual headline inflation rate cooled to 5.71 per cent in October, but remained near a seven-year high of 5.95 per cent in September. BI’s inflation target is at range of 2 per cent to 4 per cent. BI’s deputy governor Dody Budi Waluyo said on Friday inflation may decelerate further this month to 5.5 per cent. Warjiyo is expected to lay out BI’s policy guidance for 2023 at an annual gathering with financial stakeholders on Nov. 30.

Source: Reuters