Indonesia's Policy Reforms Will Boost Growth in 2016: ADB
Jakarta. Indonesia’s economic growth is expected to rebound this year on the back of growing optimism over the government's wide-ranging economic policy reforms, the Asian Development Bank said in a report on Wednesday (30/03).
“Despite global financial market volatility, the wide-ranging economic reforms carried out by President Joko Widodo’s administration have bolstered market confidence and are showing positive results,” said Steven Tabor, the ADB’s country director for Indonesia.
“It is critical for Indonesia to implement its ambitious public investment program, to deepen and maintain the momentum of these reforms to boost productivity, attract investment, and nurture new sources of growth,” Tabor added.
Additionally, Indonesia’s estimated economic growth will accelerate to 5.2 percent this year from 4.8 percent last year, according to the Asian Development Outlook (ADO), the Manila-based lender's annual publication. This is despite Indonesia having seen five years of decelerating economic growth.
The report said public investment is projected to increase this year, as new infrastructure projects initiated last year have started to gain momentum.
"Higher public capital spending and ongoing reforms to deregulate the economy will provide additional opportunities for private investment. Household spending is expected to pick up in 2016, while net external demand is not expected to contribute to growth," the ADB said in the report.
The report also noted that growth in fixed investments increased by 5.1 percent in 2015 as the government managed to draw more investment in the infrastructure sector and introduced economic policy reforms to make Indonesia more appealing to private investors.
"The government’s ongoing policy reforms are expected to further stimulate private investment, particularly over the medium-term," the report said.
Joko has announced 11 reform packages since September 2015, aimed at improving the country’s investment climate.
Still, the ADB said long-term challenges for Indonesia include diversifying economic activity to reduce dependence on a narrow range of commodities.
“Expanding the manufacturing sector can help, along with a stronger focus on sectors that can deliver strong growth such as tourism, high-value agriculture, marine fisheries, aquaculture and e-commerce,” the ADB advised in the report.
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