Import growth to be higher than that of export: Economist

Bank Mandiri economist Faisal Rachman has predicted that the growth in imports will be higher than that of exports in 2023, driven by strengthening domestic demand.

Domestic demand in 2023 will be driven by the lifting of restrictions on community activities (PPKM) and the decision to continue national strategic projects (PSN), he noted, according to a statement received here on Friday.

However, import growth in 2023 is likely to weaken compared to 2022 due to sliding oil prices and an anticipated decline in exports, Rachman said.

“Even though it is projected to shrink, the trade balance surplus can last longer because we see a more gradual decline in commodity prices,” he added.

He also estimated that national foreign exchange reserves will reach around US$135 billion–140 billion by the end of 2023, or not too far from US$137.2 billion in December 2022.

“We anticipate that the current account balance will turn into a manageable deficit of around 1.10 percent of the GDP (gross domestic product) in 2023 from an estimated surplus of 1.05 percent of the GDP in 2022,” he said.

Meanwhile, regarding the balance sheet, he predicted that Indonesia will face a number of challenges in 2023, but its potential remains visible.

Some of the challenges include increasing concerns over the global economic slowdown, which could trigger a risk-off sentiment in emerging markets, including Indonesia, with investors tending to switch to safe-haven assets.

In addition, the reopening of China’s economy could also attract investors to seek portfolio rebalancing in Asia.

However, he said that the government’s policy to continue downstreaming natural resources could attract more direct investment into Indonesia.

He further said that efforts to maintain export proceeds (DHE) of natural resources could also hinder the placement of assets abroad.

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