Economist at UOB Group Enrico Tanuwidjaja reviews the latest GDP releases in Indonesia.

Key Takeaways

“Indonesia’s economy expanded by 5.4% y/y in 2Q22, the fastest increase in a year compared to the previous quarter which grew by 5.0%. This is due to further loosening of COVID-19 curbs, amid rising exports boosted by higher commodity prices. On a sequential basis, Indonesia’s economy advanced by 3.7% q/q in 2Q22, beating market consensus of 3.4%, marking the strongest quarterly rebound since 3Q20.”

“Household consumption and investment spending continued to grow, with household consumption in particular registering accelerated growth of 5.5% y/y in 2Q22 vs 4.3% 1Q22. On the other hand, government expenditure sustained its contractionary momentum seen since 1Q22, continuing to shrink in line with fiscal consolidation policies, albeit at a slower rate. Both exports and imports continued their double-digit growth, with exports rising at an increased rate compared to Q1.”

“With headwinds remaining in place on the back of elevated global uncertainty, especially rising inflationary pressures, and expected interest rate hikes by the central bank may dampen the speed of growth trajectory in the near future. As such, we maintain our GDP growth forecasts of 4.8% for 2022 and 5.0% for 2023.”