Daily Management Review

Indonesia's Q2 GDP Growth Exceeded Expectations, Growing The Quickest In A Year


Official data showed that Indonesia's economic growth surged in the April-June quarter due to an export boom fueled by higher commodity prices, but monetary tightening, rising inflation, and the prospect of a global recession all threaten the outlook.
According to Statistics Indonesia, the second-quarter GDP was up 5.44 per cent over the previous year, the strongest growth rate in a year. This exceeded the consensus prediction of a 5.17 per cent increase in a Reuters survey, as well as the 5.01 per cent annual growth in the first quarter.
Exports increased over 20 per cent year on year, up from 16.22 per cent in the previous quarter, which the statistics agency described as "outstanding."
Household consumption, which accounts for more than half of GDP, recovered further when the COVID-19 limitations were lifted, with the Eid al-Fitr holiday in May providing a further boost. Investment, though, has stagnated.
Food and beverage, mining, construction, and transportation and warehousing industries grew quicker than in the preceding period.
However, Indonesia's central bank stated last month that the increase in full-year 2022 GDP from 2021 will be at the lower end of the 4.5 per cent to 5.3 per cent range. It had previously predicted growth in the middle of this range.
It lowered its projection because a global economic downturn would hurt exports and a rise in domestic inflation would hinder the rate of consumption recovery.
Consumer prices rose 4.94 per cent year on year in July, marking a seven-year high and leading economists to urge for Bank Indonesia to raise interest rates from pandemic-era lows.