2016 Economic Growth will Exceed 2015

Indonesia government represented by Coordinating Minister for the Economy Darmin Nasution, expressed optimism that Indonesia’ economic growth in 2016 will be higher than the economic growth in 2015. The conviction was based on data of economic growth in 2015 supported by a capital expenditure incurred by the government and gross fixed capital formation. Key factors driving economic growth is a result of infrastructure development undertaken by the government during 2015 and will continue in 2016. For the year 2016, capital expenditure is executed earlier than the previous year, starting from January. It also deals with the politics of Indonesia which began a steady weakening opposition forces is characterized by a number of opposition political parties that declared itself as a party of government supporters.


As a database, Head of the Central Bureau of Statistics, Suryamin, announced that the annual economic growth in Indonesia in 2015 is 4.79%. Annual rate of 4.79% was reached on the distribution of the economic growth of 4.71% in the first quarter, 4.66% in the second quarter, 4.74% in the third quarter and 5.04% in the fourth quarter. Annual economic growth of 4.74% is the lowest economic growth in the last six years, were respectively 5.02% (2014), 5.56% (2013), 6.3 (2012) and 6.5 (2011).


The Government of the Republic of Indonesia will strive to create a high economic growth and sustainable development, where such stability is the main condition for the continuation of the economic development of a country. One supportive step, the government will issue policies to encourage foreign investment, to create employment and increase in export sales. Such economic stabilization will be achieved if the government succeeded in creating political stability, rule of law and other economic incentives for the business environment. Therefore, the government beliefin high economic growth and sustainable development, supported by facts that political stability is getting better and more reliable law enforcement,is the opportunity for foreign investors to do business in Indonesia. 2016 is a good time to start investing in Indonesia, where political stability and economic stability continues to show a positive trend.


Indications economic stretching in 2016 will be better, also can be analysed from Bank Indonesia's data showing that growth in third party funds in the form of low-cost funds, which consist of demand deposits and savings throughout 2015 grew 9.62%, while the same period in 2014 grew only 6.12%. On the growth side of high cost funds from third parties, commonly in form of deposits, it grew only 6.2% in 2015, much lower than growth in the same period of 2014 as of 19.7%. Meanwhile, economic growth in 2015 was reduced by a decline in household consumption. The fact that the growth of low-cost funds increased, the growth of high cost funds are declining, but not followed by increase of household consumption in economic growth, which means that the public deposits shifted from medium / long term to the short term, whichthe short term deposits it is not used for consumption. Assumed all factors held constant (ceteris paribus), short-term public deposits will be on standby position to support their working capital or invested into the business. This is a good news for the economy of Indonesia in 2016, including for foreign direct investment.


If you need more explanation about government economic policies which are released to accelerate economic growth in 2016, please get in touch with our international business advisor at info@winnindo.com.