The Indonesian economy grew solidly by 5.3 percent in 2022, led by strong rebound in domestic demand as consumer and business confidence was sustained, and by robust exports. Economic growth will likely remain strong at 5.0 percent in 2023, supported by resilient domestic demand amid an expected slowdown in global demand.
While soaring global food and fuel prices were passed on to domestic prices, consumer price inflation has been relatively contained due to Bank Indonesia (BI)’s prompt monetary policy response in synergy with policy measures conducted by the government and related institutions to control inflation, including subsidies of fuels and other necessities.
The authorities are encouraged to constantly recalibrate the policy mix to maintain stability and support economic growth in the face of stronger headwinds. In addition, accelerating structural reforms is critical for Indonesia to transition smoothly to a green and sustainable economy and to adapt to demographic changes, along with ongoing efforts to boost infrastructure development and improve the business climate.