2022 State Budget: Fiscal Policy and Structural Reform

National Economic Recovery Expected to Continue Strong GDP Growth¹ % QoQ YoY 7.07 3.51 B.31 1.55 8.0 6.0 4.0 5.05 2.0 3.83.27 3.74.31 4.01 4.01 4.21 4.20 3.14 3.19 3.09 3.06 0.04 / 0.0 (2.07) -2.0 (0.16) (1.73) (0.36) (1.81) 1)(0.30) (1.70) (1.69) (0.41) (0.52) -4.0 -6.0 -8.0 (1.742.41) (0.42 0.96) (419) Q1 Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q203 2014 2015 2016 2017 2018 Favourable GDP Growth Compared to Peers2 15.00 % yoy 10.00 2019 2020 2021 • Indonesia's economy maintained positive growth in the third quarter of 2021 despite moderating in response to a surge of the highly contagious Delta variant of coronavirus. The national economy grew 3.51% (yoy) in the third quarter of 2021, down from 7.07% (yoy) in the previous period. Economic growth was primarily supported by exports in line with persistently solid demand in Indonesia's trading partner countries. Meanwhile, domestic demand moderated as a corollary of mobility restrictions introduced to overcome the Delta variant. Indonesia's main economic sectors maintained positive momentum, despite contractions felt by sectors relating to public mobility. Moving forward, Bank Indonesia will continue to strengthen coordination with the Government and other relevant authorities to accelerate economic growth, including monetary-fiscal policy coordination, reopening priority sectors, increasing exports as well as economic and financial inclusion. • In terms of spending, all GDP components maintained lower growth compared with conditions in the previous period. Household consumption expanded 1.03% (yoy), down from 5.96% (yoy) in the second quarter of 2021 due to public mobility restrictions in several regions of Indonesia. Investment moderated to 3.74% (yoy), bolstered by building investment, and government consumption grew 0.66% (yoy) in line with the expenditure reallocation to accelerate the national economic recovery program and contain the Delta variant. Meanwhile, exports continued to perform well on the back of strong global demand, growing 29.16% (yoy) in the reporting period. Imports, on the other hand, also grew 30.11% (yoy) in the Q3 of 2021. • Indonesia's major economic sectors, namely the Manufacturing Industry, Trade and Mining, maintained positive performance. In contrast, however, sectors relating to mobility, such as Accommodation and Food Service Activities, as well as Transportation and Storage, experienced contractions. Spatially, positive national economic performance was supported by nearly all regions, 9.50 7.60 4.50 5.00 3.20 3.20 0.00 Growth Prospect *) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Institutions -5.00 2021 GDP growth (% YoY) -10.00 2021 Budget 5.0 -15.00 Bulgaria Colombia Bank Indonesia 3.2-4.0 India Indonesia Philippines IMF (WEO, Oct 2021) 3.2 World Bank (East Asia and Pacific Economic Update, Oct21) 3.7 1. 2. Source: Central Bureau of Statistics of Indonesia (BPS), ** Including non-profit household consumption Source: World Economic Outlook Database - October 2021; * indicates estimated figure ADB (ADO, Sep 2021) 3.5 45 *) Consensus Forecast number will be given later

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