Prabowonomics: Can Indonesia Really Grow at 8%?

Abstract

President Prabowo Subianto’s administration has several strategies to achieve its goal of 8% growth: increasing the role of state-led capitalism, expansive fiscal measures and unconventional monetary interventions. However, despite the administration’s well-meaning intention to boost aggregate demand, we show how the design and implementation of its policies may backfire, creating distortions that will prevent optimal growth. We argue that the administration’s narrow focus, coupled with its lack of attention to what many see as the real problems limiting productivity, will inhibit its 8% growth ambition.