An Adaro coal mine in Tabalong, South Kalimantan. (Antara Photo/Sigid Kurniawan)

Challenging Credit Conditions Expected as GDP Growth Slows in Indonesia

BY :DIANA MARISKA

DECEMBER 09, 2019

Jakarta. Indonesia may face challenging credit conditions in the next two years due to slow GDP growth, according to an outlook on the national economy released by credit rating agency Moody's in Jakarta on Monday. 

Moody's senior credit analyst Jacintha Poh said predicted slow GDP growth in the next two years would affect the country's overall credit condition heavily.

Indonesia's GDP growth is expected to reach 4.7 percent in 2020 and increase slightly to 4.8 percent in 2021.

Jacintha said property – and in particular residential property – will remain one of the most stable sectors in Indonesia.

Meanwhile, analyst Maisam Hasnin said the price of coal and palm oil – the country's two biggest export commodities – are expected to fall next year. 

Maisam said the price of palm oil had nosedived to its lowest in ten years in 2019 thanks to a combination of two factors: continued negative sentiment against palm oil from the European Union and the continuing United States-China trade war, which has affected the price of soybean oil and hence also the price of palm oil.

President Joko "Jokowi" Widodo had set a target of turning Indonesia into a developed country by 2045 with a GDP of $7 trillion.

Moody's managing director Michael Taylor said Indonesia's economic growth might continue to increase but declined to give his verdict on Jokowi's ambition.

Taylor did say that for that to happen, the government would need to invest even more heavily in infrastructure and education.

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