Paris. Chairman of the Advisory Board at the Indonesian Chamber of Commerce and Industry (Kadin) Anindya Novyan Bakrie asserts that Indonesia's economic fundamentals are robust enough to withstand the impact of global geopolitical and geoeconomic factors, including the Middle East crisis.

"Indonesia's economic fundamentals are strong enough to withstand the pressure and threats of crises due to escalating tensions in the Middle East, such as the pressure on the rupiah against the US dollar this week," Anindya told the International Chamber of Commerce (ICC) Secretary-General John Denton at the ICC headquarters in Paris, France, on Wednesday.

Anindya pointed out several indicators demonstrating Indonesia's macroeconomic strength, including its ability to achieve growth rates above 5 percent, outpacing the global average of 2 percent. President Joko Widodo aims for 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.

Controlled inflation is another indicator cited by Anindya, with Indonesia's inflation rate standing at 3.05 percent annually as of March 2024, well below that of other Organisation for Economic Co-operation and Development (OECD) member countries.

Regarding the depreciation of the rupiah, which breached the psychological level of Rp 16,000 per US dollar, Anindya argued that this is not the first time it has happened. Previously, in April 2020, the rupiah exchange rate experienced a similar fate. The depreciation is not only experienced by the rupiah but also by other regional currencies. 

"This is due to the uncertainty of the geopolitical situation due to the escalation in the Middle East. Not to mention the escalating trade war between the US and China," he explained.

Anindya emphasized the government and Bank Indonesia's (BI) experience in dealing with pressure situations like the current one, highlighting the importance of maintaining communication with the business world to ensure the implementation of targeted policies.

He also mentioned that Indonesia's debt-to-gross domestic product (GDP) ratio is within a safe range, below 40 percent, contrasting with many post-Covid debt ratios in other countries that remain high, some even exceeding 100 percent.

Regarding the political situation, Anindya stressed that Indonesia's smooth national leadership transition process from President Joko Widodo to Prabowo Subianto supports a conducive economic environment. He highlighted Indonesia's position as an economic leader in ASEAN and its status as the only ASEAN country that is a G-20 member, with ongoing efforts to become an OECD member, positioning Indonesia as a middle force of the Global South on the global stage.

"Around 82 percent of the population participated in the 2024 General Elections, and more than half of them are young or first-time voters. This is important because half of the world's population this year is also facing elections," he explained.

In response, John Denton welcomed Indonesia's position in supporting global economic growth. Additionally, Indonesia is expected to be a balancing force in global geopolitics. "Moreover, Indonesia's position in the Indo-Pacific as the world's largest Muslim-populated country," said the ICC Secretary-General.

The ICC is an organization that promotes international trade and investment systems. The ICC has a network that spans over 170 countries, covering more than 45 million businesses from small enterprises to large multinational corporations.
 

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