Jakarta. The Institute for Development of Economics and Finance (Indef) predicts that economic growth in 2024 will only reach 4.8 percent, falling below the government's target of 5.2 percent.

"Considering the global and domestic conditions, it is not pessimistic, but realistic, to forecast economic growth in 2024 to be around 4.8 percent," said Indef's Executive Director, Esther Sri Astuti, in Jakarta on Thursday.

National economic growth has been largely supported by household consumption. Based on data from the Central Statistics Agency (BPS), household consumption contributed significantly to the economic growth in 2023, accounting for 58.83 percent of the expenditure components and growing at 4.82 percent.

"However, economic growth components are not limited to household consumption alone, but also include investment, government spending, exports, and imports. Yet, household consumption remains dominant," Esther explained.

She mentioned that there's a shortage of food supply on the household consumption side in 2024. At the same time, imports have not been fully realized, and rice production has not reached its peak. These factors lead to an increase in demand for food items, especially before the elections. Consequently, prices rise, particularly when supply decreases amid increased demand coupled with seasonal factors such as elections, Ramadan, and Eid.

"So, this will erode consumer purchasing power and slow down consumption. Eventually, since 53 percent of economic growth is driven by household consumption, our prediction is an economic slowdown," Esther added.

Similarly, Bank Central Asia's Economist Agus Salim Hardjodinoto, predicts that the economic growth in 2024 will reach 5 percent. However, the economy will still face challenges and opportunities to maintain growth at 5 percent.

"We hope that there may be interesting developments amidst the uncertainties that align with the government's target," Agus explained.

One of the challenges is to keep the consumption rate at 5 percent. Especially in the first quarter of 2024, there's the election momentum, the distribution of social assistance, food mitigation, and the Ramadan period.

"If we can increase it, our economy will be relatively more solid, and the growth target can be achieved even though other factors may also be affected," Agus concluded.

President Joko "Jokowi" Widodo is targeting economic growth to range between 5.3 percent and 5.6 percent in 2025, surpassing the 5.05 percent recorded in 2023 and the 5.2 percent target for this year.

In comparison, the International Monetary Fund (IMF) forecasts Indonesia to achieve a growth rate of 5 percent for the current year and the following year. Meanwhile, the World Bank predicts a decrease in growth for both 2024 and 2025, with the growth rate projected to be 4.9 percent in each of those years.