Indonesia’s economy has been praised by the World Bank for shaking off unusually damaging natural disasters and global volatility.
The Washington-based bank says coordinated and prudent macroeconomic policies have underpinned the country’s steady economic growth.
Maritime sectors such as tourism and fisheries could make a larger contribution to Indonesia’s economic development and sustainable growth if they are better managed, it says.
“Indonesia’s prudent economic management has paid off, ” said Rodrigo A Chaves, World Bank country director for Indonesia and Timor-Leste.
“Despite capital outflows from emerging markets in 2018 that were larger than during the ‘taper tantrum’ in 2013, Indonesia’s economy remains strong, which helped reduce poverty to a record low of 9.7% in September 2018.
“To accelerate growth from current levels, Indonesia needs further and sustained structural reforms, while maintaining solid fiscal and monetary policies.”
In its June 2019 Indonesia Economic Quarterly released this week, World Bank economists have said the country’s drivers of growth shifted over the first quarter of 2019.
Growth in fixed investment decelerated from multi-year highs, while both private and government consumption picked up.
This helped moderate the pressure on the current account deficit, which was large in 2018 in part because of imports used in infrastructure and private investments.
Indonesia’s economy is projected to grow at 5.1% in 2019 rising to 5.2% next year as private consumption continues to accelerate amid low inflation and strong labour markets strong.
The bank believes that a stronger fiscal position will allow more government investment including new infrastructure projects and the reconstruction effort in Lombok and Palu following natural disasters.
A key priority, it says, is to protect Indonesia’s maritime assets from climate change and marine debris so that its full potential can be realised.
“The government of Indonesia has shown a strong commitment to making the country a global maritime powerhouse,” said Ann Jeannette Glauber, World Bank practice manager for environment and natural resources.
“Harnessing the full potential of Indonesia’s marine and coastal assets will require policies and investments to reduce plastic marine debris, sustainably manage fisheries, and protect corals reefs and coastal habitats to improve coastal livelihoods and boost Indonesia’s brand for high-quality marine tourism.”