Indonesia Finance Minister Sri Mulyani Indrawati said she was optimistic about the 5% economic growth target this year despite the darkening global outlook, especially from China.
“We are optimistic for 2023 because we see the figures on the first half,” Indrawati said in an interview with Bloomberg Television’s Haslinda Amin ahead of the G-20 finance chiefs’ meetings in India. “The second half, there is a positive side from our own side, explicitly on household consumption.”
While there has been signs of weaknesses in Southeast Asia’s largest economy, including weaker exports, Indrawati said elections next year will also spur the economy thanks to extra spending from the government as well as political parties.
The comments come as finance chiefs from the world’s largest economies grapple with the risk of a global recession, brought about by high interest rates and still-elevated inflation. Indrawati said Indonesia was looking to strengthen its ties with India as both economies look for ways to shield against the impact of China’s lackluster performance.
“Their economic growth is remarkably very strong. And that’s why they need quite a lot of imported commodities Indonesia,” she said in reference to India. “We’re here trying to discuss on the partnership which is going to be much benefiting both sides.”
China is grappling with several challenges, including the looming prospect of deflation, subdued economic growth and a faltering property market. India on the other hand is posting one of the fastest growth rates in the world thanks to the expansion of its services sector, cushioning the impact of elevated interest rates.
Global Bonds
Indonesia has slashed its 2023 budget deficit estimate to 2.3% of GDP, from an initial forecast 2.8%, as the fiscal balance remains at an ample surplus through the mid-year. That’s a timely move given major economies are raising interest rates, which pushes up borrowing costs.
A smaller-than-expected budget gap could also give Indonesia’s government some breathing space before tapping global markets again for bond sales.
“From the fiscal point of view, we have a quite comfortable level of revenue in dollars,” Indrawati said. “That’s helped us in terms of serving our debt for this year even for the next year.”
Indonesia has been reducing its weekly bond sales as the finance ministry halved its sovereign bond issuance target for this year and will rely on cash reserves to finance the budget. The government has sold $3 billion dollar bonds and 104.8 billion yen-denominated debt in the Japanese market so far this year.
--With assistance from Haslinda Amin, Andy Clarke and Kurien Abraham.
(Updates with Indrawati’s comments on global bond issuance)
