MACROECONOMIC ANALYSIS SERIES: Indonesia Economic Outlook Q1-2024

Indonesia is in a dire need of new engine of growth. This is evidently shown by economic growth performance that is highly dependable on business cycle and commodity prices. Following the moderation of commodity prices and the passing of holiday season in the previous quarter, Indonesia’s GDP only grew by 4.94% (y.o.y) in Q3-2023 and registered as the lowest quarterly growth since Q4-2016 (excluding Covid-19 period of 2020 and 2021). In addition, Indonesia is aspiring to become high-income country by 2045 and it necessitates the economy to grow substantially beyond the current level. To achieve this, reindustrialization and significant productivity improvement is required. However, the process of reindustrialization and productivity improvement is a medium- to long-term process due to its structural nature in the economy. Therefore, structural reform needs to be carried on and keep being policymaker’s priority. The upcoming general election will result in the new taking office and next should not lose focus on the issue of productivity and reindustrialization.

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