- Indonesia’s economic growth momentum would increasingly rely on domestic factorsas the global demand is expected to weaken in 2024. Higher fiscal spending amid the election period may fuel the economy towards another 5% YoY GDP growth in 2024, but concerns on whether the fiscal spree would last throughout the year means that the GDP growth number in 2024 may be a touch slower than in the previous year.
- Relatively stable domestic inflation and the receding pressure on Indonesia’s financial market may encourage Bank Indonesia to pursue a looser policy stance in 2024. However, the still-volatile global interest rate expectation may continue to put the central bank on high alert, as BI is expected to lower the BI7dRR by 50-75 bps in 2024 depending on how the Fed would follow through on its dovish signals.
- Indonesia may retain its trade surplus, given the prospect of still-elevated commodity prices in 2024. However, the relatively robust domestic aggregate demand growth and the continued strength of investment growth may hold Indonesia’s current account balance at a narrow 0.5% GDP deficit in the upcoming year.
