PwC Indonesia in the release of PwC Indonesia Economic Update-Q2 2023 stated that the world economy is entering 2023 with optimism. This was driven by China's reopening and Europe's better-than-expected economic performance in overcoming the Russia-Ukraine conflict.
"However, during the first semester of 2023, there were several important economic events that reduced global economic optimism. First, a series of banking failures in the US and Europe, which demonstrated the vulnerability of the global financial system," said PwC Indonesia Investment Director Julian Smith, quoted from a written statement. , Thursday, 13 July 2023.
Second, the Eurozone has officially entered a recession, which was marked by a contraction in GDP in the fourth quarter of 2022 and the first quarter of 2023. Third, the new normal of high interest rates is expected to persist as the fight against inflation continues.
Meanwhile, Indonesia's economic growth remained strong amidst a global economic slowdown driven by improving domestic demand and continued positive export performance. Industry-wise, growth in the first quarter of 2023 was mainly led by transportation and warehousing, as people's mobility increased and the arrival of foreign tourists.
Furthermore, Indonesia's total investment realization in the first quarter of 2023 amounted to IDR 328.9 trillion, equivalent to 23.5 percent of the total investment target in 2023. This realized value was mainly contributed by investments outside Java, where Central Sulawesi is seen as the top for the purpose of Foreign Investment (PMA).
"It is driven by the reserve factor of its mineral resources. However, the global economic slowdown could hinder Indonesia's progress in achieving this year's investment realization target," he said.
Julian noted, in 2023, the infrastructure budget is directed at accelerating infrastructure development that supports economic transformation and new growth centers, such as the completion of the National Strategic Project (PSN), the implementation of the Public Private Partnership (PPP) financing scheme, and many more.
PwC Indonesia Head of Research and Economics Denny Irawan added, domestically, Indonesia's extraordinary economic recovery continues by recording GDP growth of 5.03 percent YoY in the first quarter of 2023. Inflation has declined moderately since January 2023, touching 4% YoY in May 2023.
"Exports remained strong and were the biggest contributor to growth in the first quarter of 2023, recording 11.68% YoY growth, driven by China's domestic recovery," he concluded.
Image source: Ministry of Finance
