Indonesia is expected to see positive economic growth in 2021, after undergoing its first recession in two decades in the third quarter of 2020 due to the COVID-19 pandemic. The country looks to consumer and infrastructure spending as the main engines of GDP growth. The Finance Minister expects the economy to grow by 5% in 2021.
According to the Institute of Chartered Accountants in England and Wales (ICAEW), Indonesia has relatively stable retail sales and industrial production. However, imports have declined substantially in 2020, and social mobility, as well as retail sales, are still sluggish compared to pre-pandemic levels.
To enhance future economic development, Indonesia and South Korea have signed an economic partnership agreement to boost trade and investment. With the new Comprehensive Economic Partnership Agreement (CEPA), South Korea will remove more than 95% of its tariff lines, while Indonesia will eliminate over 92% of its tariff lines and offer preferential market access. The implementation of the partnership is expected to start in 2021, and will impact a wide range of sectors, from automobiles to apparel.
(Sources: Jakarta Post; Reuters)