Jakarta. The Indonesian economy is expected to maintain a positive outlook this year, on the back of a domestic recovery and changing monetary policies by the world's major economies, Finance Minister Sri Mulyani Indrawati said on Tuesday (23/01).
"We are optimistic that stability in the financial system will persist to support the growth momentum of the national economy," Sri Mulyani said during a press conference after the quarterly meeting with Financial System Stability Committee (KSSK).
The KSSK, established at the height of the 2008 financial crisis, is comprised of a group of policy makers from the Ministry of Finance, Bank Indonesia, the Financial Services Authority (OJK) and the Deposit Insurance Corporation (LPS). The body is responsible for taking measures to prevent financial crises in the country.
The committee concluded that last year's fourth quarter was normal, thanks to a recovery in the domestic economy, marked by low inflation that remained within the target range over the past three years, a robust current-account balance, high inflows of foreign capital, a stable rupiah exchange rate and foreign exchange reserves reaching record levels.
Indonesia recorded a five-year high trade surplus of $11.84 billion last year, while inflation remained within the central bank's target range of 3.61 percent. The country's foreign exchange reserves rose to $130 billion.
Bank Indonesia has set an inflation target of between 2.5 percent and 4.5 percent this year.
Sri Mulyani said future external challenges include a plan by the United States Federal Reserve to increase its benchmark rate; a balance sheet reduction by major economies; economic balancing in China; and geopolitical conflicts.
Domestic risks include the impact of rising global oil prices on inflation and state subsidies; slow loan growth; perception in the market of this year's simultaneous regional elections and next year's legislative and presidential elections; and cryptocurrencies.
The KSSK will meet again in April.