Indonesian president to unveil 2021 budget and economic agenda

Indonesian President Joko Widodo is scheduled to deliver a state of the nation speech before the Indonesian House of Representatives today.

Widodo is expected to outline the government’s budget for 2021 as well as additional economic incentives to address the effects of COVID-19. The domestic economy has been hit hard by the pandemic—it recorded a 5.32% GDP contraction in the second quarter of 2020, the first drop since the Asian Financial Crisis of 1998. The government approved a $47 billion stimulus package earlier this year, although the slow disbursement of funds has blunted its impact.

Indonesia’s executive leadership and legislature have thus far agreed to a 2021 budget with a 4.7% GDP deficit. Leadership will likely introduce measures to expedite the release of approved funds, as only 20% has been released due to faults in the database used to track eligible recipients. The economy is expected to recover to pre-pandemic levels next year, with growth forecasts of 4.5-5.5%.

Expect Widodo’s speech to focus on the national economic response as well as a plan to disburse the Chinese Sinovac vaccine that is currently being developed in Indonesia. Investor sentiment is reportedly bullish with regards to manufacturing, as firms such as South Korean giant LG have recently announced new Indonesian investments totalling $850 million. However, growth remains contingent on the manner in which Indonesia extricates itself from COVID-19, specifically with regards to domestic vaccine availability.