Asia economic outlook: Indonesia proposes Rp2.7 quadrillion budget for 2022

President Joko Widodo on 16 August proposed a Rp2.7 quadrillion budget with shrinking fiscal deficit and higher growth target. In his speech, the president stated that next year, the theme would be accelerating economic recovery and strengthening structural reforms while still controlling the pandemic in the country.

With the proposed budget, Indonesia is looking at a 5%-5.5% economic growth next year, up from this year’s growth at 3.7%-4.5%. The proposed budget is only slightly higher than this year’s spending at Rp2.6 quadrillion. The proposal also came with a deficit target of 4.85% of GDP, down from the revised deficit projection for this year at 5.82%.

However, some analysts and experts warned that uncertainties during the pandemic could affect the plan. Director at the Center of Economic and Law Studies Bhima Yudhistira even deemed the budget plan “inconsistent and unrealistic”, considering the current inflation. 

Indonesia walked out of recession in the second quarter of this year, but mobility restrictions erode its effects. The government also proposed a plan for bond issuance worth Rp991.3 trillion.

The surge of the Delta coronavirus variant indeed robbed Asia of a momentum for economic resurrection. Asia-Pacific Head of Research at ING in Singapore Rob Carnell said, "It's clear that economies across the region are suffering more from Covid-19 than they previously did. The biggest factor is that Asia is poorly vaccinated."