Indonesia’s Strategy to Safeguard Domestic Demand Wins Praise Amid Global Uncertainty
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JAKARTA, investortrust.id – Indonesia’s decision to bolster domestic demand in the face of global economic headwinds has been praised as a crucial and effective move by the head of the nation’s deposit insurance agency.
Chairman of the Indonesia Deposit Insurance Corporation Purbaya Yudhi Sadewa said the policy, championed by the administration of President Prabowo Subianto and Finance Minister Sri Mulyani Indrawati, serves as a vital buffer to support national growth amid ongoing international market turmoil following the US decision to impose the so called reciprocal tariffs against all of its trading partners.
“If the global economy is in chaos, should we be afraid? Not really. I’m an optimist,” Purbaya said during the Economic Roundtable with the President of Indonesia, held at Menara Mandiri in Jakarta on Tuesday, April 8, 2025.
He emphasized that domestic consumption and investment continue to act as the backbone of Indonesia’s economic resilience. Household consumption accounts for 63.36 percent of the country’s gross domestic product, while gross fixed capital formation—or investment—contributes around 32 percent.
“The policy direction from President Prabowo and Minister Sri Mulyani clearly shows a commitment to sustaining domestic demand. I believe this is the right strategy,” he said.
Reinforcing this point, Purbaya noted that Indonesia can continue to grow steadily as long as its domestic market remains robust—even if global conditions continue to deteriorate.
“So stay calm even if the global economy is turbulent. As long as we maintain strong domestic demand, we will continue to grow well,” he added.
Purbaya also called for better communication to reassure markets about the soundness of Indonesia’s economic fundamentals.
“Market players should not be overly worried. Institutions like IPB (Bogor Agricultural University) and ISEI (the Indonesian Economic Scholars Association) must help spread this message to the market,” he said.
Additionally, Purbaya highlighted the critical role of financial system stability in supporting the banking sector’s intermediation function. Coordinated efforts by Bank Indonesia, the Financial Services Authority, and the Ministry of Finance have successfully spurred double-digit credit growth.
“The most important figure, in my view, is the 14.62 percent growth in investment credit—this is the highest it has been in years. Investment credit reflects expectations about the future,” he said.
Despite ongoing global uncertainties, including the threat of trade wars, Purbaya believes Indonesia’s economic outlook remains positive.
“Our economy is in an expansionary phase. Ironically, global turbulence such as tariff wars could even benefit us. Our economic profile is strong,” he concluded.