REPUBLIKA.CO.ID, JAKARTA -- The World Bank has projected that Indonesia's economy will remain strong and record an optimistic growth of 5.1 percent in 2017 and 5.3 percent in 2018.
"Indonesia's economy can still grow more optimistically," World Bank Country Director for Indonesia Rodrigo Chaves noted at the launch of the latest Quarterly Economic Report in Jakarta on Tuesday.
Chaves said factors that will support Indonesia's economy to grow more optimally are a conducive external environment, strong economic fundamentals, and progress in structural reforms.
"The basics to boost the Indonesian economy are good policy reform, strong domestic demand, and contribution from the external environment," he remarked.
He added that household consumption will grow stronger and contribute to the economy coupled with hike in real wages and increase in employment opportunities.
In addition, private investment benefited from a decrease in Bank Indonesia's reference interest rate that resulted in lower borrowing costs as well as an improvement in the business environment and public investment in the infrastructure sector.
According to Chaves, infrastructure development is important, as it has had a positive impact on the investment sector since the fourth quarter of 2015.
"Better and more well-planned infrastructure will help Indonesia increase growth and equitable prosperity of more people," he said.
The World Bank's Quarterly Economic Report also exposed some external risks, such as uncertainty arising due to the normalization of the Fed's monetary policy, the weakening of commodity prices, and the protectionist trade policies implemented by developed countries, which could affect Indonesia's economic growth.
Other risks arising from the domestic side will be the implementation of inconsistent structural reforms, which could have a negative impact on economic growth forecasts, as Indonesia will enter the year of politics in 2018.
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