Indonesia’s President Joko Widodo (2nd from left) leaves with members of parliament Irman Gusman (left), Setya Novanto (3rd from left) and Vice President Jusuf Kalla (front right), after delivering an address before a joint session of parliament in Jakarta yesterday. Widodo lowered economic expectations yesterday with a more modest initial growth forecast for next year as he unveiled a proposed 2016 budget.

AFP/Jakarta

Indonesian President Joko Widodo lowered economic expectations yesterday with a more modest initial growth forecast for next year, as he unveiled a proposed 2016 budget that also highlighted his government’s focus on improving infrastructure.
Widodo took office in October last year promising to boost Southeast Asia’s biggest economy but he has faced criticism for failing to revive growth, which fell to a six-year low of 4.7% in the second-quarter.
Analysts say the president has made insufficient progress in pushing his economic agenda due to red tape and a lack of coordination between ministries, while unfavourable global conditions have also put pressure on the economy.
In yesterday’s budget, growth for 2016 was forecast to reach 5.5%, more modest than the government’s initial estimate for this year of 5.7%, which economists say is now far out of reach.
“The government assumptions of 5.5% growth next year still look a bit too positive for us,” Wellian Wiranto, economist from Singapore-based OCBC Bank, told AFP. “But compared to 5.7% that they had in mind for this year, that’s a bit more realistic.”
Wiranto said his forecast for Indonesia’s growth next year was 5.2%.
Widodo also pledged to increase infrastructure spending to 313.5tn rupiah ($22.8bn), from 290.3tn rupiah this year, as his government seeks to better connect the sprawling archipelago.
In his first state of the nation address, shortly before he delivered the budget, he listed key infrastructure projects that the government is building, including roads on the main island of Java and new railways in various parts of the country. Poor infrastructure, from potholed roads to ageing ports, is a major complaint of businesses. However, efforts to boost infrastructure have so far made little progress, with the government only succeeding in spending a fraction of its budget and projects stalled or moving forward only slowly.
Widodo reshuffled his cabinet earlier this week, replacing key economic ministers in a bid to revitalise his reform agenda.