Information (The Jakarta Post)
Tue, November 30, 2021
The Bank Indonesia (BI) annual meeting held this week highlighted the importance of building optimism, building synergies and innovating to welcome 2022, as the economy has shown signs of improvement in recent months, securing a path to economic recovery.
BI Governor Perry Warjiyo said that a synergy of economic policies and performance in 2021 may be the capital needed to rise up and remain optimistic for a better economic recovery in 2022.
“The strengthening of synergies and innovations aims to strengthen mass economic immunity against the COVID-19 pandemic. While the reopening of priority economic sectors has led to a short-term economic recovery through a policy that has generated demand, it has also driven higher growth in the medium term through a policy of structural reform, ”Perry said at the time. of the 2021 BI Annual Meeting, held in a hybrid format. November 24.
Under the theme “Arise and Be Optimistic: Synergy and Innovations for Economic Recovery,” BI’s annual meeting highlighted the prospects for Indonesia’s economic growth as the health crisis begins to abate.
According to Perry, the Indonesian economy is expected to grow between 4.7% and 5.5%, up from 3.2% to 4.0% in 2021.
The global economic recovery will be the engine of the country’s economic growth as it will have a positive impact on exports and an increase in domestic demand due to the surge in consumption and investment. Vaccination campaigns, opening of economic sectors and recovery plans will contribute to the economic rebound in 2022.
According to BI, the low inflation rate will be maintained and controlled at 3 ± 1% in 2022, supported by an increase in the national production capacity through an increase in efficiency and productivity to respond to the increase in production. demand for aggregation in the economy.
The current account deficit is expected to be small, between 1.1% and 1.9% of gross domestic product (GDP) in 2022. The stable financial system will be maintained, with high equity capital and abundant liquidity. Meanwhile, third-party funds and loans will increase by 7-9% and 6-8% respectively in 2022.
The digital economy will grow at a rapid pace. By 2022, the value of e-commerce transactions is expected to reach 530 trillion rupees (US $ 37 billion), registered electronic money at 337 trillion rupees, and digital banking services at over 48 trillion rupees.
BI will continue its policy mix, which will form part of the orientation of national economic policy to accelerate economic recovery and preserve economic stability. The policy mix covers five policy instruments, namely momentary policy, macroprudential policy, payments system policy, deepening financial markets policy and MSME policy and economic and financial sharia.
In response to the risk of increasing pressure on the stability of global financial markets due to the normalization of monetary policy by the United States Federal Reserve and a number of advanced economies (EAs), the BI will further focus its monetary policy in 2022 on stability (pro-stability), either in terms of the inflation rate and the objective of achieving the rupee’s exchange rate, or in terms of macroeconomic stability and the financial system. “Measures to normalize monetary policy will be carried out cautiously and in a measurable manner so as not to disrupt the process of national economic recovery,” said Perry.
The other four policy instruments in 2022 will be part of collaborative efforts to accelerate the national economic recovery (pro-growth), according to Perry.
BI will continue to relax macroprudential policy and even expand it to stimulate bank lending and financing for priority sectors and financial systems, as well as to develop the green economy and finance.
The digitization of payment systems will continue to be extended to accelerate the national digital economy and finance, including strengthening industrial consolidation and developing modern payment system infrastructures, including QRIS, SNAP and BI-Fast.
QRIS will be extended and targeted to an additional 15 million users, and collaboration on intercountry QRIS will also be further developed. Meanwhile, BI-Fast will be extended to the entire banking network to serve 24/7 real-time retail transactions.
BI also advocates for the electronicization of financial transactions at the level of regional administration, social assistance (bansos) from the government to the person (G2P) 4.0, modes of payment for transport and the digitization of MSMEs. and tourism.
Financial market deepening policy
BI will accelerate the depth of money market and foreign exchange market in accordance with the 2025 Money Market Deepening Plan (BPPU 2025) to enhance the efficiency of policy transmission, the development of modern and international money market infrastructure and the development of financing instruments, including the development of sustainable finance.
MSME Politics and Sharia Economics and Finance
Efforts will continue to further expand initiatives to develop an inclusive economy and finance that involve MSMEs and Sharia economics and finance, including through digitization and expanding access to national markets and ‘export.
BI’s annual meeting was attended by President Joko “Jokowi” Widodo, heads of the People’s Consultative Assembly (MPR), heads of the House of Representatives (DPR), heads and members of the Commission XI overseeing finance and banking, heads of state agencies including the Supreme Control Agency (BPK), labor ministers, governors and regents / majors, heads of banking companies and not banks, economists, the media and representatives of a number of international agencies.
President Jokowi also felt it was crucial to be optimistic about welcoming into 2022 while stressing the importance of remaining cautious given the uncertainties that could arise at any time.
Economic sectors will be opened in stages, according to the president. “If an area has the possibility of being opened, then please open it, but you must respect the sanitary protocols. If you are eager to organize a big event, do it, but make sure that a working group will accompany you. [the event]. We have to be completely careful, ”Jokowi said.
The rapid spread of the COVID-19 Delta variant in the third quarter of 2021 prompted the government to impose the emergency restrictions on public activities (PPKM Darurat) for the entire month, which caused the economic decline. “But now economic activities have started to move,” the president said.
“The consumer confidence index has returned to normal, at the same level as it was before the pandemic. The retail index and sales also started to rise and strengthen depending on the ease of mobility. Based on these numbers, we can see what the outlook for 2022 looks like, ”he said.
On the production side, the president revealed that Indonesia’s manufacturing purchasing manager index was recorded at 57.2, higher than in the pre-pandemic period, while it was 51. . This 57.2 is a high number, so factories and industries must see good prospects with the growing demand, ”he said.
President Jokowi expressed his gratitude to Bank Indonesia, Ministry of Finance, Financial Services Authority (OJK) and Indonesian Deposit Insurance Corporation (LPS) for their good communication.
” They complete each other. Whenever they found a small problem, they could fix it immediately. These prudent measures must continue as uncertainty reigns everywhere, which is difficult to measure and calculate. But the key is how to control the pandemic in our country as the problem is getting more and more complex, ”he noted.
At the event, BI also presented the Bank Indonesia 2021 awards to 57 stakeholders, both individuals and groups, as a symbol of BI’s appreciation for their support in carrying out BI tasks. The awards also reflected BI’s synergy with its stakeholders and with the government, OJK and LPS in accelerating the national economic recovery.
BI’s annual meeting held at the end of each year aims to present the central bank’s perspective on the latest economic conditions, challenges, future prospects and policy directions within the framework of public accountability. , the president giving directions.