IMF keeps RI growth forecast at 5% amid lower Asian projection

The International Monetary Fund (IMF) has maintained Indonesia’s growth forecast at 5 percent for this year while lowering its projections for other emerging economies in Asia, with India being the only other exception.  

Indonesia’s economy is expected to keep to its projected growth path of 5 percent in 2023, according to the IMF’s latest World Economic Outlook published on Tuesday.  

This figure remains unchanged from the fund’s April report and puts Indonesia on a par with the IMF’s latest growth projection of 5 percent for China.  

In China’s case, however, the latest projection is 0.2 percentage points lower than the fund’s April forecast, reflecting expectations of a stronger headwind from its real estate crisis and weakening confidence among businesses and consumers.  

The growth projections for Indonesia’s ASEAN neighbors, namely Malaysia, the Philippines, Thailand and Vietnam, have been lowered by between 0.5 and 0.9 percentage points compared to the IMF’s April outlook.  

In contrast, the IMF revised its projection for India upward by 0.4 percentage points from its April figure to 6.3 percent, reflecting stronger-than-expected consumption through June.  

Overall, the IMF expects growth in Asia’s emerging markets and developing economies to slow by 0.1 percentage points to 5.1 percent compared to its April outlook. This is also in line with the fund’s slower global forecast of 3 percent growth, down from 3.6 percent in its previous report. 

Pierre-Olivier Gourinchas, economic counselor and research director at the IMF, said on Tuesday that global growth prospects were weak, especially for emerging markets and developing economies.  

“The implications are profound: a much slower convergence toward the living standards of advanced economies, reduced fiscal space, increased debt vulnerabilities and exposure to shocks, and diminished opportunities to overcome the scarring from the pandemic and the war,” Gourinchas wrote on IMFBlog. 

The fund has projected global headline inflation to continue to slow from 9.2 percent year-on-year (yoy) in 2022 to 5.9 percent this year, and then to 4.8 percent in 2024.  

It has also projected a decline in core inflation, excluding food and energy prices, albeit at a more gradual rate to 4.5 percent next year. 

Inflation in China, Thailand and Vietnam is expected to average below their targets this year. The projection for China reflects subdued core inflation in the context of substantial economic slack, with rising youth unemployment and pass-through from lower energy costs, according to the IMF’s October report.  

The fund projects slower inflation in Thailand due to the impact of lower energy prices on core inflation, as well as lower house prices. In Vietnam, the inflation slowdown is attributed to an overall decline in economic activity and pass-through from lower energy prices. 

Source: The Jakarta Post 

Indonesia Adds Cosmetics, Bicycle to MFN Tariff List

The Indonesian government has extended its most-favored nation (MFN) tariff coverage to safeguard domestic industries, with new tariffs imposed on cosmetics, bicycles, wristwatches, and iron/steel imports. 

Under the latest regulation from the finance ministry, the MFN tariff ranges from 25 to 40 percent for bicycles, 10 percent for wristwatches, 10 to 15 percent for cosmetics, and up to 20 percent for iron and steel. 

MFN tariffs, also known as antidiscrimination tariffs, apply to all World Trade Organization (WTO) members unless they have established free trade agreements or other preferential trade deals. 

A customs official said on Friday that the decision was prompted by a significant increase in retail purchases through delivery service companies, as opposed to traditional wholesale imports via cargo fleets, particularly for the four mentioned product categories. 

"We have included these four products in the [MFN] classification due to the substantial rise in transactions through delivery services, especially in the cosmetics sector, which could ultimately impact domestic industrial growth," Fadjar Donny Tjahjadi, the Finance Ministry's Director of Customs, was quoted by Antara news agency as saying. 

Four years ago, the government had similarly incorporated textiles, apparel, footwear, and bags into the MFN tariff list. 

Fadjar added that, aside from these specific products, retail purchases made via delivery service companies are subject to a flat tariff of 7.5 percent. 

Source: The Jakarta Globe 

Jakarta adds more electric buses to reduce air pollution

The Jakarta provincial government is gradually increasing the number of electric buses to reduce air pollution and continue to encourage the public to use mass transportation to reduce traffic congestion. 

"The plan to replace conventional buses with electric buses will be carried out to minimize air pollution," Jakarta Acting Governor Heru Budi Hartono noted in a statement received here on Thursday. 

Currently, the city's bus rapid transit TransJakarta has operated at least 52 electric buses in order to support the government's efforts to reduce air pollution. 

The provincial government also continues to deal with traffic congestion, such as readjusting traffic light cycle times to reduce queue length and delay times, managing road parking, and prioritizing pedestrian and bicycle users. 

Hartono said his side continues to coordinate with the central government and related stakeholders to integrate public transportation modes in Jakarta in order to encourage people to switch to public transportation. 

The provincial government provides subsidies worth Rp4.3 trillion (US$273 million) per year for public transportation. 

In detail, Rp3.5 trillion of the subsidies had been allocated for TransJakarta and Rp800 billion for the Mass Rapid Transit (MRT). 

Hartono stressed that convenience in using public transportation is a top priority in building an integrated transportation system. For this reason, the Jakarta provincial government, in synergy with the central government, provides subsidies for the mass transport sector. 

The acting governor's statement was made to respond to city legislator Justin Adrian, who put the spotlight on Jakarta's traffic that is estimated to have caused losses of Rp65 trillion per year, or Rp178 billion per day. 

"We support that 10 percent of the total 2024 regional budget (APBD) must be allocated for integrating public transportation programs, which cover MRT, LRT, TransJakarta, and Jaklingko, to reduce congestion and pollution," he stated. 

Source: Antaranews