ADB Bullish on Indonesia

ADB increases 2017, 2018 growth projections for developing Asian nations

By Tabita Diela
Monday, July 24, 2017

The Asian Development Bank increased its 2017 and 2018 growth projection for "developing Asian nations" — referring to 45 economies in Asia and the Asia-Pacific region — due to higher-than-expected external demand.

The Manila-based multilateral lender revised its 2017 and 2018 growth projections for developing Asian nations to 5.9 and 5.8 percent respectively.

Previously, it projected a growth rate of 5.7 percent.

The growth projection update was unveiled in a supplementary report released on Thursday (20/07), which serves as an addendum to the bank's Asian Development Outlook 2017 report published in April.

"Developing Asia is off to a good start this year with improved exports pushing growth prospects for the rest of 2017," Yasuyuki Sawada, ADB's chief economist, said in a note.

"Despite lingering uncertainties surrounding the strength of the global recovery, we feel that the region's economies are well-placed to face potential shocks to the outlook," he said.


ADB kept its forecast for Indonesia's 2017 gross domestic product growth at 5.1 percent and 5.3 percent for 2018.

That is higher than the estimated growth for the overall Southeast Asia countries, which is at 4.8 percent in 2017 and 5 percent in 2018.

ADB's outlook matches the government's 5.1 percent GDP target stated in the 2017 State Budget.

ADB's outlook and the government's target for Indonesia are more pessimistic compared to the World Bank's estimation of 5.2 percent GDP growth this year and 5.3 percent next year.

The World Bank's estimation is based on the upbeat global market and the country's strong fundamentals. This inlcudes the country's growing consumption rate, reduced inflation, accommodative monetary policies and the narrow current account deficit.

The Indonesian economy grew by 5 percent in the first quarter of 2017 on the back of "robust" private consumption — which is the biggest contributor to GDP, accounting for nearly 57 percent of it — and "solid" export performance due to higher commodity prices for coal, palm oil, rubber and nickel.

Thursday's report supplements ADB's previous report in April in which the bank highlighted the skills gap as a major constraint for Indonesia to achieve its growth potential.

This article first appeared on the Jakarta Globe website on July 20, 2017.

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