Analysts are warning that Indonesia’s economy could start overheating if President Prabowo Subianto goes ahead with his plan to push the country’s gross domestic product growth to 8% per year.
An overheating economy, when GDP grows unsustainably, could lead to rising inflation and unemployment. The outcome could also include rising interest rates, as the central bank would need to push down inflation.
Many believe Indonesia can only grow at around 5% annually.
One sustainable way to pursue high GDP growth is to get more foreign direct investment (FDI), BCA chief economist David Sumual says.
To attain 8% GDP growth annually within the next five years, the government would need to ramp up FDI by fivefold from the current realization, he adds.
Last year, the country attracted Rp 744 trillion (US$47.19 billion) in FDI, an increase of 13.7% from the previous year, according to Investment Coordinating Board (BKPM) data.
Source: The Jakarta Post
