The Asian Development Bank (ADB) has downgraded its economic growth forecast for Indonesia this year to 3.5 percent year-on-year (yoy), from 4.5 percent yoy earlier.

“Recovery will continue, albeit at a more moderate level of 3.5 percent as compared to 4.5 percent projected last April,” ADB senior country economist Henry Ma remarked during the Asian Development Outlook 2021 in Jakarta on Wednesday,

ADB also revised down its economic growth forecast for Indonesia next year to 4.8 percent yoy, from five percent yoy earlier.

Henry highlighted several factors behind ADB’s decision to downgrade its economic growth forecast for Indonesia, including the lower-than-projected growth of 7.07 percent in the second quarter of 2021.

The second-quarter growth of 7.07 percent, which fell short of expectations, laid a lower basis for economic growth in the ensuing year.

The second factor behind ADB’s decision were stringer restrictions on public mobility during the third quarter of 2021, which applied pressure on economic indicators, such as retail sales, motor vehicle sales, consumer confidence, and Purchasing Managers’ Index (PMI).

The third reason was the economic slowdown in various countries due to new variants of COVID-19 and the case spike, especially in developed nations, including the United States; financial pressure on the global economy; and contraction in the service sector.

The Manila-based bank also projected Indonesia’s inflation rate at 1.7 percent for this year, lower than its earlier forecast of 2.4 percent, and at 2.7 percent for next year, lesser than its previous forecast of 2.8 percent.

ADB also projected the Current Account Balance (CAB) at minus 0.5 percent for this year as compared to its previous forecast of minus 0.8 percent, and at minus 0.9 percent for next year in comparison with the previous forecast of minus 1.3 percent.

“With the 3.5-percent growth in 2021, the real GDP in 2021 will be 1.4-percent higher than that in 2019. For 2022, the slowdown will continue, so the growth is projected at 4.8 percent,” he stated.

Source: Antara News