Economics
Indonesia Short on Policy Ammunition as It Targets Higher Growth
- Central bank is taking a more cautious approach on rate cuts
- Fiscal stimulus is also limited by budget deficit ceiling
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Indonesia’s government and central bank are running into policy limits as they try to stimulate Southeast Asia’s largest economy.
Authorities are predicting growth in 2020 will be the fastest in seven years despite lingering trade tensions between the U.S. and China and subdued global demand. Yet policy options to spur demand are limited: The central bank is already taking a more cautious approach after four interest rate cuts last year, while a revenue shortfall is pushing the budget deficit close to the legally mandated cap of 3% of gross domestic product.