Indonesia targets 5.6%-6.2% average GDP growth to 2024

JAKARTA (Reuters) – Indonesia’s President Joko Widodo has set a target range of 5.6%-6.2% for average annual economic growth rate in his second term in office up to 2024, his planning minister said on Monday.

Widodo began his second five-year term in October after winning an April election by campaigning to improve the education system, encourage investment and create jobs in Southeast Asia’s largest economy.

The upper end of the 2019-2024 average GDP growth target was even more ambitious than the most optimistic forecast his officials had suggested last year.

The planning ministry had in mid-2019 given Widodo three scenarios for growth, with the most pessimistic seeing average GDP growth of 5.4% a year, a middle scenario of 5.7% and the most optimistic 6%.

“We understand the situation in the international world, but we must remain optimistic,” Planning Minister Suharso Monoarfa told a news briefing following a cabinet meeting where the president approved the target.

Government officials have estimated a 5.05% GDP growth rate in 2019, which would be the first slowdown in four years, as exports fell and investment weakened amid a global economic slowdown. This year’s GDP growth target is 5.3%.

In his first term, Widodo promised to lift annual GDP growth to 7%, which he failed to deliver. Indonesia’s economic growth has hovered around 5% in recent years.

David Sumual, chief economist of Bank Central Asia, said Widodo’s new target appeared too optimistic given low prices of Indonesia’s main commodities and global uncertainties related to the U.S.-China trade war and an upcoming election in the United States.

However, if promised structural reforms go to plan in the next two years, Sumual said economic growth could accelerate to 5.8% by the end of the president’s term.

Planning Minister Monoarfa said the president would issue a decree later this month that would lay out more details of the government’s medium term plans.

This would include other targets, such as cutting the poverty rate to 7% by 2024, from 9.4% currently, and reducing unemployment rate to 4.3% from 5.3%, Monoarfa said.

He added the decree will include Indonesia’s targets in the Paris climate change accord and improving the country’s disaster resilience.

(Reporting by Agustinus Beo Da Costa, Maikel Jefriando and Tabita Diela; Writing by Gayatri Suroyo; Editing by Toby Chopra)


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