Jakarta The Financial System Stability Committee (KSSK)  projects a 5 percent economic growth rate for the second quarter of 2024, based on household consumption, investment, and exports. Overall economic growth by the end of 2024 is expected to be between 5 percent and 5.2 percent.

According to Finance Minister Sri Mulyani, export performance is anticipated to improve in the second quarter of 2024, particularly in manufacturing and mining. Additionally, key trading partner India is experiencing positive economic growth. She added that domestic economic activity is expected to continue through the end of 2024.

The government will also optimize the 2024 State Budget (APBN) policy, focusing on government spending to maintain price stability, which is crucial for public purchasing power.

"We will also continue social protection programs, especially for vulnerable communities, to ensure that the impact on purchasing power and consumption is maintained," said the former World Bank managing director during a KSSK press conference in Jakarta on Friday.

In November 2024, simultaneous regional elections are expected to boost household consumption, a key driver of national economic growth.

Sri Mulyani is also optimistic about the Indonesian rupiah strengthening, supported by attractive yields and low inflation at 2.13% in July 2024

"Going forward, the rupiah exchange rate is expected to move stably with a tendency to strengthen," said Indonesian Finance Minister Sri Mulyani Indrawati.

As of July 26, the rupiah has strengthened by 0.52% month to date (MTD) compared to the end of June 2024. However, it has weakened by 5.48 percent year to date (YTD) since the end of December 2023, reflecting global conditions.

Despite this, the rupiah's depreciation is still better than other Asia-Pacific currencies. For instance, the South Korean won has declined by 6.93 percent YTD, and the Japanese yen by 8.27 percent.

BI: The Fed May Cut Rates Sooner Than Expected

Bank Indonesia (BI) predicts that the US Federal Reserve (The Fed) will cut the benchmark interest rate (Fed Funds Rate/FFR) more quickly, influenced by U.S. and global economic conditions.

"The direction of the Fed Funds Rate will likely be quicker, and of course, the US Treasury Note will also decline faster," said BI Governor Perry Warjiyo.

Previously, BI predicted the Fed Funds Rate would drop in December 2024. Given recent developments, the Fed Funds Rate is now expected to decrease in September 2024. This prediction is also based on the interest rate conditions of the European Central Bank (ECB) and the Bank of England (BoE), which have already begun lowering their benchmark rates.

"The US central bank has not yet adjusted. This is why we need to see its impact on global interest rates, particularly US government bond yields," Perry explained.