The Indonesian economy expanded by 5.0 percent in 2023 and is projected to strengthen to 5.2 percent in 2024. Robust domestic demand is backed by solid consumer confidence, a boost from election-related spending, and ongoing development of national strategic projects, including the new capital city. In addition, a gradual recovery in external demand is expected to support growth.

The central bank’s consistent policy mix response and its close policy coordination with the government contained the headline inflation to within the 3.0±1 percent target in 2023. In addition to energy subsidies, the government increased rice imports and strengthened inter-regional supply and distribution of necessity goods, especially food, to offset the impact of the El Niño weather. The continued implementation of both supply and demand-side measures is expected to keep inflation within a lower target of 2.5±1 percent in 2024.

These conclusions are highlighted in the 2023 Annual Consultation Report on Indonesia.