Indonesia Logs Fastest Growth In 9 Years

(RTTNews) - Indonesia's economy grew at the fastest pace in nine years in 2022, reflecting the rebound in exports and household consumption after the relaxation of pandemic related restrictions.

In the whole year of 2022, Southeast Asia's largest economy expanded 5.31 percent after the 3.70 percent growth posted a year ago and a contraction of 2.07 percent in 2020, the statistical bureau said Monday. This was the biggest growth since 2013.

Gross domestic product registered an annual expansion of 5.01 percent in the fourth quarter, which was weaker than the 5.73 percent growth seen in the third quarter, but faster than the 4.84 percent expected growth. On a quarterly comparison, economic growth slowed to 0.36 percent from 1.83 percent in the preceding period, data showed. Nonetheless, GDP posted positive growth for the third consecutive quarter.

Economic growth is forecast to slow further as weak global demand, high inflation and elevated interest rates drag on activity, Capital Economics' economist Shivaan Tandon said.

Although the central bank has indicated that further interest hikes are unlikely, rates are set to remain elevated as it aims to support the rupiah, the economist noted. As such, the economic growth is seen easing to 4.8 percent in 2023, Tandon added.

ING economist Nicholas Mapa said Indonesia's exports and the manufacturing sector are set to face headwinds in 2023 with the economy needing to rely more heavily on household consumption for growth.

But stubbornly high inflation could weigh on consumption at least in the first half of 2023, pulling overall growth this year. Growth momentum seen last year is fading, Mapa said.

In January, the consumer price inflation slowed to a five-month low of 5.28 percent from 5.51 percent in December. But the rate remained well above the Bank Indonesia's target of 2-4 percent.

The expenditure-side breakdown of GDP revealed that household spending advanced 4.5 percent annually in the fourth quarter. On the other hand, government spending fell 4.8 percent.

At the same time, investment grew around 3.8 percent. Exports logged a double-digit growth of 14.93 percent and imports gained 6.25 percent.