Indonesia’s Economy Holding Up Well in 2022; Faces Headwinds in 2023 — ADB

JAKARTA — Indonesia’s economy is expected to grow by 5.4% in 2022 and by 5.0% in 2023, according to a report by the Asian Development Bank (ADB) released today. Inflation is projected to increase significantly in 2022 and to remain elevated in 2023.

“The Indonesian economy is coping well with threats to growth,” said ADB Country Director for Indonesia Jiro Tominaga. “Consumer spending is robust, and commodity exports have boomed. However, high commodity prices have also spurred inflation. For 2023, the risks are on the downside due to slower global growth, global financial volatility, tighter macroeconomic policy in Indonesia, and continuing shocks from the Russian invasion of Ukraine.”

The Asian Development Outlook (ADO) 2022 Update says robust consumer demand has more than offset lower government spending. But demand for Indonesia’s commodity exports has also been healthy, supporting growth and generating a fiscal revenue windfall.

Inflation, which averaged 1.6% last year, is forecast to rise to 4.6% in 2022 because of higher commodity prices and the recent fuel price increases. It is projected to be almost 6.0% through June 2023 and to ease to below 4.0% by end 2023.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 member-countries—49 from the region.