Optimism in Political Years

At a gathering of 100 economists on Tuesday, President invited businessmen and investors to remain optimistic regarding the economy.

Kompas/Riza Fathoni

Workers install steel frames on Monday (20/11) for the Pasar Rumput low-cost apartment in South Jakarta, which will be integrated with public transportation and shopping facilities. The apartment is scheduled to be finished in 2018, and will be used to resettle local residents, but will also be open for public rental.

Indonesia will enter the political years ahead of the simultaneous regional elections held across 171 regions in 2018 and the presidential elections in 2019.

At a gathering of 100 economists on Tuesday (12/12) in Jakarta, President Joko Widodo invited businessmen and investors to remain optimistic regarding the economy. Optimism was also expressed by various circles, from economists, bureaucrats and technocrats, to businesspeople.

We have many reasons to be optimistic. In terms of the macroeconomic foundation, many parties agreed that the economy was on the right track, stable, and growing. Externally, this optimism is supported by the improving condition of the global economy.

The IMF has predicted that the world GDP will grow 3.6 percent in 2017 and 3.7 percent in 2018. As for trade, global trade is predicted to grow 2.9 percent this year after a period of stagnation. Indonesian exports are also growing stronger, notably coal and palm oil, especially upon improving demand and commodity prices.

Investment prospects are also improving, with the country’s increased rank in competitiveness, ease of doing business, and debts. Various steps taken in government policy, such as deregulation, de-bureaucratization, and infrastructure development, has also placed the economy in a better position to grow and take the advantage of the improving global economy.

From the political side, the public has shown relative democratic maturity, so that routine political cycles such as the general elections and regional elections can run smoothly without social turmoil. From past experiences in running the general elections, political spending for general elections can drive economic activities through improving the demand and purchasing power of lower-income economic segments.

A number of major agendas, like Indonesia’s hosting of the 2018 Asian Games, also have the potential to become an additional driver to move the economic further.

Forecast to grow 5.1 percent this year, the Indonesian economy is expected to grow 5.4 percent next year. The relatively low inflation and interest rates also have the potential to encourage the real sector. Job opportunities are predicted to improve in keeping with the government’s plan to focus more on poverty reduction and job creation through various labor programs, social assistance stimulus and the village fund program.

These positive descriptions do not necessarily mean we can neglect the various risks and challenges that exist, both internally and externally. Do not let us lose focus in preparing and working hard to reach the targets. We do not want to lose the momentum from various economic and political developments, both at the national and international levels.

All parties have an interest in maintaining a conductive situation and condition in the country so that concerns over the warming political stage will not affect the business climate or the national economy.