Indonesia's Elections and the Economic Outlook: Growth and Stability Amidst Political Dynamics

The 2024 Indonesian election is not just a political event; it also significantly impacts the country's economy. The Rp 71.3 trillion budget is predicted to boost economic growth through increased consumption. Consumer spending is projected to rise by 0.21% in 2024. 

Indonesia held its fifth democratic national elections this year on February 14th. This nationwide vote covered a variety of positions, with interesting issues extending beyond just politics and government. Young people who are tech-savvy and have sensitivity to every policy are one of the groups of voters this year, creating an election that is increasingly interesting to follow. 

Elections have so many impacts, both positively and negatively. Elections not only affect the realm of domestic politics but also permeate every aspect of life for the Indonesian people. In light of this, a key question remains: How will the recent elections affect Indonesia's economic conditions?

The heated political situation due to the general election held on February 14 has subsided, and it has been decided that Prabowo-Gibran, the pair elected as the next president and vice president of Indonesia, who won 164,227,475 valid national votes, has provided certainty for a clearer political direction going forward. This has had a good impact on the economy in Indonesia with the return of domestic political stability coupled with APBN spending, especially the Transfer to Regions (TKD), which has started running again, giving the government optimism that the economy will be better in the future because investor and market confidence are still maintained.

In the first quarter of 2024, Indonesia's economic growth was a robust 5.1%, driven by domestic demand, increased population mobility, tourism, and other economic activities during the 2024 general election, national holidays, and periods of collective leave, along with support from the state budget. This economic growth significantly reduced Indonesia's open unemployment rate, leading to a substantial increase in employment.

Indonesia's economy shows robust growth with improving consumption across all components, particularly in government and household sectors. However, there was a slight weakening in gross fixed capital formation, within a reasonable range, due to investor wait-and-see behavior during the 2024 general election. While food inflation remains a pressure on consumption levels, it is expected to ease due to various supporting factors, including weather conditions. Furthermore, in terms of the rupiah, it is predicted to strengthen to 15,750 per US dollar by the end of 2024. This prediction is attributed to the anticipated easing of interest rates by the US Federal Reserve, as well as the stability of Indonesia's current account balance.

Positive developments in the Indonesian economy are starting to emerge, in line with economists' predictions. Investment is also starting to pick up again after the election is over, providing an important opportunity for investors to read the market and determine the right momentum. Are you ready to delve deeper into researching the future of the economy? 

Dinamic the 9th is here to accompany the economic and political dynamics in Indonesia with relevant themes. This is your chance to join and #DecodeTheMarket with Dinamic the 9th!

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