Economic Outlook for 2020 Maintained - Bank Sentral Republik Indonesia
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September 21, 2020



BI Governor Perry Warjiyo is optimistic that the promising national economic outlook for 2020 can be maintained along with growth momentum. Economic growth in Indonesia is projected to increase in 2020 to 5.1-5.5%. Inflation will be kept under control within the target corridor, namely 3.0±1%. Meanwhile, the current account deficit will be controlled within the manageable threshold of 2.5-3% of GDP in 2020, underpinned by a significant capital and financial account surplus, which will support external stability. Furthermore, stable rupiah exchange rates are predicted for 2020. In terms of the bank intermediation function, Bank Indonesia projects deposit growth at 8-10% in 2020 and growth of outstanding loans disbursed by the banking industry at 10-12% in line with lower interest rates and a stronger economic outlook. In the medium term, Indonesia’s economic outlook will continue to improve. Economic transformation will catalyse stronger growth, coupled with a narrower current account deficit and low inflation. Towards Indonesia becoming a high-income country by 2045. President Jokowi took the opportunity to confirm adequate room to stimulate national economic growth through the private sector, considering that the State Budget contributes just 14.5% to economic growth. Those were the key takeaways delivered at the Bank Indonesia Annual Gathering 2019, held today (28/11) in Jakarta.

Against a backdrop of turbulent global economic headwinds, the policy mix instituted by Bank Indonesia in 2019 will be strengthened further in 2020. To that end, Bank Indonesia will implement policy based on six focus areas to maintain stability and build growth momentum.  First, monetary policy will remain accommodative.  Second, accommodative macroprudential policy will be maintained to catalyse economic financing.  Third, payment system policy will focus on strengthening digital-based instruments and public infrastructure through five payment system initiatives, namely 1) developing open banking; 2) strengthening the configuration of the retail payment system; 3) strengthening financial market infrastructure; 4) developing public infrastructure for data; and 5) strengthening the regulatory, licensing, and supervisory framework. In addition, to support national digital economic and financial integration, Bank Indonesia has also disseminated the future direction of payment system policy as contained in the Indonesia Payment System Blueprint 2025: Navigating the National Payment System in the Digital Era Fourth, financial market deepening policy will be strengthened to support effective monetary and macroprudential policy.  Fifth, policy to empower the Islamic economy as well as micro, small and medium enterprises (MSME) as new sources of economic growth in Indonesia. Sixth, strengthening synergy with a focus on: (i) macroeconomic and financial system policy synergy to maintain stability; (ii) economic transformation synergy to catalyse economic growth and bolster the economic structure; and (iii) synergy in digital innovation to support national digital economic and financial integration.

The Bank Indonesia Annual Gathering is held regularly towards the end of each year for Bank Indonesia to express its current views concerning the latest economic conditions, future challenges and outlook as well as policy direction as a form of accountability and transparency. The event was attended by the President of the Republic of Indonesia, Joko Widodo, leaders of state institutions, cabinet ministers, regional governors, leaders of the banking industry and nonbank corporations, academics, economists and representatives from several international institutions. The theme of this year’s gathering is “Synergy, Transformation and Innovation: Towards Indonesia Maju”.

In his speech, the BI Governor detailed three important economic lessons from 2019 that could be plucked as a strategy to confront declining globalisation and increasing digitalisation in order to strengthen resilience and catalyse economic growth towards the advancement of Indonesia (Indonesia Maju). First, macroeconomic and financial system policy mix synergy, which will be strengthened to ensure national economic resilience. Second, economic transformation to achieve stronger growth through the development of new domestic growth sources with a focus on the manufacturing industry and tourism. Third, innovation in the digital economy and finance to strengthen economic competitiveness in the national interest and bridge the inequality gap.

At the Bank Indonesia Annual Gathering, Bank Indonesia also presented the BI Award for 2019 to 39 economic players across 13 categories, consisting of corporates, individuals and clusters as a form of appreciation for the best performing economic players in terms of supporting task implementation at Bank Indonesia. The award also reflects upon the synergy built between Bank Indonesia and economic players in conjunction with the Government, Indonesian Financial Services Authority (OJK) and Deposit Insurance Corporation (LPS) towards maintaining macroeconomic stability and facilitating solid, sound and sustainable economic growth.

Jakarta, 28th November 2019


Onny Widjanarko
Executive Director



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