Indonesia Economic Outlook 2023: Maximize Green Economy Potential

The government highlighted the economic challenges in 2023 which are still shrouded in uncertainty. These include tightening monetary policy, global inflation and the potential for a recession.

This was stated by the Acting Head of the Center for Macroeconomic Policy at the Fiscal Policy Agency (BKF) of the Ministry of Finance (Kemenkeu) Abdurrahman in the Indonesia Economic Outlook 2023 Forum which was held on Monday (3/10/2022).

The series of events was under the auspices of Kanopi FEB UI and was held at the Auditorium of the Fiscal Policy Agency, Ministry of Finance. This year's forum is themed "Maximizing Indonesia's Economic Momentum: Enriching Opportunities Through Green Economy".

Sri Mulyani Indarawati, Minister of Finance said that Indonesia's challenges next year will also revolve around counter cyclicals, namely climate change, energy and food crises, and high inflation. The global crisis is the next shock for Indonesia.

“The two shocking phenomena cause disruption to the demand and supply sides. Of course we can't make a faster recovery," he said.

James Walsh, IMF Senior Resident Representative for Indonesia assessed that the economy in 2023 is quite challenging. This is indicated by lower global demand, persistently rising inflation, as well as more difficult financial conditions.

"This is the impact of a slowdown in economic growth and concerns about inflation," he said, Tuesday (10/11/2022).

He assessed that these three impacts affected Indonesia's economic efforts to rise since the COVID-19 pandemic took place. Even so, Indonesia's exports are considered to be able to survive quite well during the pandemic so that they can create a strong external position.

He revealed that the basic problem that Indonesia is currently facing is the increasing price of main imported goods, such as food and fuel oil (BBM). However, James appreciated the Ministry of Finance for implementing prudent fiscal policies.

"Hopefully the Indonesian economy can rise and overcome various challenges, especially climate change, and can continue to develop towards sustainable economic development," he said.

Green Economy

Said Zaidansyah, Deputy Country Director of the Indonesia Asian Development Bank (ADB) said that in supporting the national economy, countries are now required to understand and apply the green economy. The concept of a green economy is a development principle based on low carbon expenditure, efficiency in resource use, and inclusion.

"The Asian Development Bank supports the Indonesian government in implementing a green economy," he said.

ADB has operational priority standards, one of which focuses on environmental issues through safety resilience in terms of climate, disaster, environmental resilience, green recovery, disaster mitigation, water, and food security.

Medrilzam, Director of the Environment at Bappenas said that a green economy is a necessity. Its implementation has the potential to provide various multi-sectoral benefits.

However, capacity in aspects of innovation and Research and Development is still a challenge for Indonesia. To ensure the implementation of a green economy, Medrilzam explained that a smooth transition needs attention so that the sectors involved can respond well to the transition.