Indonesia's Economy to Expand Faster in 2022,2023: ADB

Jakarta Globe
April 6, 2022 | 7:54 pm
SHARE
Customers return in droves to Jakarta's Tanah Abang market, the largest textile and garment market in Southeast Asia, on March 28, 2022, as the government eases the pandemic restrictions. (B1 Photo/Joanito de Saojoao)
Customers return in droves to Jakarta's Tanah Abang market, the largest textile and garment market in Southeast Asia, on March 28, 2022, as the government eases the pandemic restrictions. (B1 Photo/Joanito de Saojoao)

Jakarta. The Asian Development Bank, or ADB, has projected Indonesia's economy to expand by 5.0 percent in 2022 and 5.2 percent in 2023 on the back of recovering demand, according to the multilateral lender's latest report published on Wednesday. 

The Asian Development Outlook (ADO) 2022 upgraded the growth estimation from its earlier projection for 2022 of 4.8 percent, acknowledging Indonesia's success in reining in the Covid-19 third wave. Still, the lender said a prolonged war between Russia and Ukraine carried a risk to Indonesia's growth momentum. 

Last year, the largest economy in Southeast Asia grew by 3.7 percent after contracted by 2.1 percent in 2020. 

"The Indonesian economy briskly rebounded from the downturn in the third quarter and ended 2021 with an output higher than in pre-pandemic 2019. Growth was broad-based and should strengthen in 2022 as economic activity continues to normalize," ADB Country Director for Indonesia Jiro Tominaga said.

Advertisement

"Private consumption and investment entered 2022 with strong momentum, and the third Covid-19 wave should have minimal impact on growth. The Russian invasion of Ukraine, however, if prolonged, could significantly affect inflation and the fiscal balance," Tominaga said.

ADB said consumer spending, which accounts for 54 percent of Indonesia's economy, has been rising in line with rejuvenated manufacturing activities that boost income, job opportunities, and confidence. 

"Private consumption should return to its pre-pandemic trend growth of 5 percent in 2022; this conservatively assumes that consumers do not fully make up for lost
spending in 2020 and 2021," ADB wrote in the report.

"Demand will also benefit from tax breaks being extended to June, albeit at less generous rates, for buying cars and houses. The digitalization of services, particularly
in commerce and finance, will support consumption through any further Covid-19 outbreaks."

Indonesia managed to control the Covid-19 third wave, driven by a highly contagious Omicron variant, in February, losing only little momentum in growth with a far lower death toll compared to last year's Delta wave.

Today, the government has eased many Covid-19 restrictions, as more than 77 percent of the country's eligible population has received complete vaccine doses.  

ADB said investment in Indonesia would soon follow suit to keep up with growing demand and benefit from improvement in business conditions thanks to the full implementation of the omnibus law. 

  The Manila-based lender saw a prolonged Russian invasion of Ukraine could further pressure inflation this year. Agricultural commodities Indonesia rely heavily on imports like wheat and soybeans have seen their prices soar in the global market due to the war.   

ADB viewed Indonesia's inflation would rise to 3.6 percent in 2022, from 1.6 percent last year. "Inflation pressure could build further this year on a prolonged war," the lender said. 

Tags: Keywords:
SHARE

Related Articles


News Jun 4, 2025 | 9:40 am

No Need to Panic Over Recent COVID-19 Spike, Health Minister Says

Health Minister Budi Sadikin says recent COVID-19 variants in Indonesia are not deadly, urges public to stay calm and follow health protocol
News Jun 3, 2025 | 5:28 pm

Indonesia on Alert as Prabowo Responds to COVID-19 Uptick

President Prabowo summons Health Minister Budi amid rising COVID-19 cases. Public urged to stay calm and follow basic health precautions.
News Jun 1, 2025 | 12:03 pm

Indonesia Issues COVID-19 Advisory Amid New Wave in Asia

In Indonesia, the number of confirmed COVID-19 cases dropped from 28 to just three over the past week.
News May 19, 2025 | 5:56 pm

Indonesia, Thailand Sign Health Pact as COVID Cases Surge in Bangkok

Indonesia and Thailand sign a health MoU in Bangkok as COVID-19 cases rise, aiming to strengthen pandemic readiness and health systems.
News May 19, 2025 | 5:45 pm

Indonesia, Thailand Sign Health Pact as COVID Cases Surge in Bangkok

Indonesia and Thailand sign a health MoU in Bangkok as COVID-19 cases rise, aiming to strengthen pandemic readiness and health systems.
News Feb 6, 2025 | 11:13 am

Argentina Joins US in Exiting WHO, Citing "Profound Differences"

Argentina's president has ordered the country to withdraw from the World Health Organization (WHO) due to "profound differences".
Business Jan 14, 2025 | 6:56 pm

ADB Inks $92.6 Million Financing Deal for 83 MW Geothermal Project in W. Sumatra

ADB says around $38.8 million of the finance package for the geothermal project will come from the bank’s ordinary capital resources.
News Jan 14, 2025 | 5:27 pm

HMPV vs. Covid-19: Key Differences in Risks, Transmission, and Management

Discover the facts about Human Metapneumovirus (HMPV), its transmission, fatality risks, and how it compares to Covid-19.
Business Jan 14, 2025 | 9:38 am

Indonesia, ADB in Talks for Infrastructure Financing

Indonesia recently nudged the ADB into funding its infrastructure programs to support Prabowo's food self-sufficiency dream, among others.
Special Updates Dec 18, 2024 | 9:11 am

TBS Secures $15 Million Funding from ADB, DBS for E-Mobility

TBS will use the $15 million funding for the procurement of electric motorcycles and the development of battery-swapping stations.

The Latest


Business 42 minutes ago

Achmad Ardianto Appointed as New President Director of Antam

Achmad brings with him an extensive background in state-owned enterprises and human capital leadership.
News 1 hours ago

Prabowo to Fly to Singapore for Leaders’ Retreat with Wong Next Week

Investments are set to become a major talking point when Prabowo meets Singapore's Lawrence Wong on Monday.
News 2 hours ago

KPK Links Rp 1.2 Trillion Papua Graft to Private Jet, Airline Boss Fails to Show Up

KPK links Rp 1.2t Papua graft to private jet purchase, but RDG Airlines boss Gibbrael Isaak skips summons. Agency urges him to cooperate.
News 2 hours ago

Over 90% of Malaria Cases Found in Papua, Health Ministry Says

Indonesia’s malaria fight faces hurdles from high case loads in Papua, mobile populations, and rising zoonotic transmission, officials warn.
News 3 hours ago

Indonesian Pilgrims Win Praise for Orderly Hajj

Indonesian Hajj pilgrims received widespread praise for their orderliness and discipline during the pilgrimage in the Holy Land.
COPYRIGHT © 2025 JAKARTA GLOBE. ALL RIGHTS RESERVED