Indonesia Maintains Steady Economic

Growth in 2019
Maritime economy presents opportunities for greater prosperity

JAKARTA, July 1, 2019 – Coordinated and prudent macroeconomic policies have underpinned
Indonesia’s steady economic growth amid global volatility and a series of unusually damaging
natural disasters, according to the World Bank’s June 2019 Indonesia Economic Quarterly
released today.

The country’s real GDP growth remained broadly stable at 5.1 percent during the first quarter of
2019. Despite global volatility, Indonesia’s economy has grown at a consistent pace with
quarterly GDP growth remaining between 4.9 to 5.3 percent over the past 3.5 years.

“Indonesia’s prudent economic management has paid off. Despite capital outflows from
emerging markets in 2018 that were larger than during the ‘taper tantrum’ in 2013, Indonesia’s
economy remains strong, which helped reduce poverty to a record low of 9.7 percent in
September 2018,” said Rodrigo A. Chaves, World Bank Country Director for Indonesia and
Timor-Leste. “To accelerate growth from current levels, Indonesia needs further and sustained
structural reforms, while maintaining solid fiscal and monetary policies.”

The country’s drivers of growth shifted over the first quarter of 2019. Growth in fixed investment
decelerated from multi-year highs, while both private and government consumption picked up.
This helped moderate the pressure on the current account deficit, which was large in 2018 in part
because of imports used in infrastructure and private investments.

Indonesia’s economy is projected to grow at 5.1 percent in 2019 and then rise to 5.2 percent in
2020. This projection is supported by private consumption, which is expected to continue to
accelerate as inflation remains low and labor markets strong. Further, a stronger fiscal position
will allow more government investment including, new infrastructure projects and the
reconstruction effort in Lombok and Palu following natural disasters.

Risks to Indonesia’s growth projection have increased with the recent re-escalation of global
tensions that could further weigh on world trade.

This edition of the Indonesia Economic Quarterly also looks at the importance of the maritime
economy to Indonesia’s economic development and sustainable growth. The country’s oceans
could make a larger contribution to the economy through higher revenues from tourism and
fisheries if better managed. Protecting Indonesia’s maritime assets from climate change and
marine debris, will be critical to leverage their potential.

“The government of Indonesia has shown a strong commitment to making the country a global
maritime powerhouse. Harnessing the full potential of Indonesia’s marine and coastal assets will
require policies and investments to reduce plastic marine debris, sustainably manage fisheries,
and protect corals reefs and coastal habitats to improve coastal livelihoods and boost
Indonesia’s brand for high quality marine tourism,” said Ann Jeannette Glauber, World Bank
Practice Manager for Environment and Natural Resources.

The Indonesia Economic Quarterly is supported by the Australian Department of Foreign Affairs
and Trade.