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Sustaining the Resistance: Indonesia’s 2023 Outlook

Marking the advance from the whirlwind-filled 2022 into the new year, The Coordinating Ministry for Economic Affairs held an economic outlook seminar entitled "Maintaining Economic Resilience through Structural Transformation" at Ritz-Carlton Hotel, Jakarta (12/21). Attended by President Joko Widodo, Coordinating Minister for the Economy Airlangga Hartarto, Minister of Finance Sri Mulyani, Minister of State Secretary Pratikno, Governor of Bank Indonesia Perry Warjiyo, and Chairman of the Board of Commissioners of the Financial Services Authority Mahendra Siregar, the symposium focuses on the country’s 2023 economic projection - encompassing development map-outs and strategic policies in various sectors. As the opening prelude, Coordinating Minister for Economic Affairs Airlangga Hartanto pertained to the current global economic recovery conditions, highlighting his concerns regarding the continuing-to-decline global economic projection and supply chain disruptions. The two major elements worsened by market weakening have ultimately caused an unavoidable increase in global inflation and the stoking fears of crisis. In spite of the global economic conditions currently in a downward state, The Minister of Finance Sri Mulyani conveyed that Indonesia is in a relatively stable position. Derived from macroeconomics, fiscal-monetary, and financial sector point of view, Indonesia has a competitive advantage compared to other emerging countries. Furthermore, state revenues and Indonesia's trade balance are moreover in a good position. Although 2023’s outlook remains attractive and optimistic, Indonesia must continue to be vigilant due to the anticipated geopolitical turbulence and uncertainty.

With the aforementioned economic volatility considered, President Joko Widodo encourages all ministers to apply constructive structural reform to avoid getting swayed by global turmoil, including dealing with state securities (SBN). The president also gave several directions to set the seal on the resilience of the national economy in facing various challenges ahead, including synergizing fiscal, monetary and real sectors, maintaining people's purchasing power, increasing exports, increasing investment, and expanding downstream and green energy. Further and deeper elaboration of President Joko Widodo's direction was discussed by two high-level panel sessions, with panel one discussing strategies for maintaining economic resilience through financial sector transformation, presented by Sri Mulyani, Perry Warjiyo, Mahendra Siregar, and Chatib Basri as economic representatives. Sri Mulyani emphasizes improving the macroeconomics sector, closing in on the balance of payments, APBN, monetary, and the growth of the real sector to sustain within the geopolitical issues. This uncertain situation might pose a further risk as export for the source of growth becomes the first main issue to be solved. She imparted diversifying the destination of export countries to maintain the country’s good export performance, which has so far maintained growth. Furthermore, investment has become the second main focus for the government, as the performance is affected by the increase of global interest rates, and they should keep the investment above 6 percent. In addition, the Minister of Finance implemented a fiscal strategy on how to maintain and continue to improve the fundamental sources of the country’s economic growth - particularly domestic factors such as consumption, investment, policies, and incentives to increase export competitiveness, attracting investment, and more productive government spending.

In addition, the panel 2 session covered the implementation of the structural transformation strategy through the ease of trying to shift the real sector. By putting the Job Creation Law into effect, structural reform will provide ease of doing business which will improve the environment for investments, productivity, and job creation. In order to increase the trust of businesses, the socialization of the Job Creation Law will continue to be hastened. The Minister of Industry Agus Gumiwang Kartasasmita, the Minister of Manpower Ida Fauziyah, the Chair of the Job Creation Law Task Force Suahasil Nazara, and the General Chair of Indonesian Chamber of Commerce and Industry (KADIN) M. Arsjad Rasjid P.M. all participated throughout the discussion panel. The industrial downstream program has been successfully implemented and has proven to provide extensive benefits. This program will continue to be implemented, notably in priority sectors including agro-industry, the mineral and mining sector, as well as the oil and gas and coal sectors. From the employment side, the implementation of Job Creation Law embodies adaptive, resilient, and inclusive policies carried out through an active labor policy which mostly includes educational training and vocational training; thus it will increase the capacity and capability of human resources, causing an increase in national productivity. In the end, all resource persons from across Ministries and Agencies present firmly and consistently emphasize that there are still many tasks and challenges ahead that require hard work and solid synergy by all stakeholders, and by working collectively, the middle-income trap can be escaped and reach the vision of Indonesia 2045.



Kementerian Koordinator Bidang Perekonomian RI

Kementerian Keuangan RI

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