DBS Economist: Indonesia’s economic growth holds steady in the midst of global economic turbulence | Bahasa
Indonesia, 16 Aug 2022 - Indonesia's economic growth continues to accelerate despite the threat of global recession. Indonesia's economy is projected to grow 5.2% in the second semester of 2022, a significant increase from the 3.7% growth reported in the first semester.
DBS Bank Senior Economist Radhika Rao said in a report entitled "Indonesia Data Pulse 2Q22 GDP Growth Jumps" that strong trade performance alongside post-pandemic resumption of activities kept Indonesia's economic growth steady. The momentum was also accompanied Indonesia’s ability to tap into rising global commodity prices and stable people's purchasing power.
"Public mobility, supported by shuttle services, accompanies the positive economic growth trends," said Radhika Rao.
Radhika Rao expects Indonesia's gross domestic product (GDP) to grow 5.44% yoy in the second quarter of 2022, exceeding previous estimates and surpassing the growth rate of 5% in the first quarter.
Indonesia's economic growth prospects are predicted to improve in 2022 to exceed the achievements in 2021 as indicated by the 5.2% growth in the first half of 2022.
“Java was the main contributor to overall growth, accounting for 56.6% of the overall economic output, up 5.7% yoy.”
Radhika Rao revealed that the expenditure-side estimate showed that government spending on goods and services led to a -5.2% contraction. However, other sub-segments reported widespread growth. Furthermore, exports grew 19.7% to exceed imports, which grew 12.3%. Household consumption grew 5.5% yoy. The figures excluded the 3.1% increase in gross fixed capital formation.
"Consumption of goods and services increased by 32 percent yoy, accompanied by a 9.1% increase in exports and 3% in imports," Radhika Rao added.
On the industry-side, the transportation and storage sectors grew 21.3% to rank first among other cross-sectoral activities. Accommodation and food services grew 9.8% while manufacturing declined by 4%.
“In addition, the construction sector grew by 1%”
According to Radhika Rao, the 2022 growth estimate still faces risks of other increases as a strong growth rate will provide the basis for Bank Indonesia to determine monetary policy in response to inflation.
In addition, a stable economic growth will help policymakers to stay focused on inflation and financial market stability. Moreover, Bank Indonesia has signaled that there is a risk inflation will exceed the target in the second half of this year, with an assumption of a recurrence in 2023.
Radhika Rao said that although core inflation is being monitored directly by policymakers, the ratio of inflation rate to interest rate remains under close observation. The focus of monetary policy is also expected to shift incrementally at the end of the third quarter.
“Policymakers should pay attention to and anticipate an acceleration in inflation,” Radhika Rao said as a final observation.
DBS Bank Senior Economist Radhika Rao said in a report entitled "Indonesia Data Pulse 2Q22 GDP Growth Jumps" that strong trade performance alongside post-pandemic resumption of activities kept Indonesia's economic growth steady. The momentum was also accompanied Indonesia’s ability to tap into rising global commodity prices and stable people's purchasing power.
"Public mobility, supported by shuttle services, accompanies the positive economic growth trends," said Radhika Rao.
Radhika Rao expects Indonesia's gross domestic product (GDP) to grow 5.44% yoy in the second quarter of 2022, exceeding previous estimates and surpassing the growth rate of 5% in the first quarter.
Indonesia's economic growth prospects are predicted to improve in 2022 to exceed the achievements in 2021 as indicated by the 5.2% growth in the first half of 2022.
“Java was the main contributor to overall growth, accounting for 56.6% of the overall economic output, up 5.7% yoy.”
Radhika Rao revealed that the expenditure-side estimate showed that government spending on goods and services led to a -5.2% contraction. However, other sub-segments reported widespread growth. Furthermore, exports grew 19.7% to exceed imports, which grew 12.3%. Household consumption grew 5.5% yoy. The figures excluded the 3.1% increase in gross fixed capital formation.
"Consumption of goods and services increased by 32 percent yoy, accompanied by a 9.1% increase in exports and 3% in imports," Radhika Rao added.
On the industry-side, the transportation and storage sectors grew 21.3% to rank first among other cross-sectoral activities. Accommodation and food services grew 9.8% while manufacturing declined by 4%.
“In addition, the construction sector grew by 1%”
According to Radhika Rao, the 2022 growth estimate still faces risks of other increases as a strong growth rate will provide the basis for Bank Indonesia to determine monetary policy in response to inflation.
In addition, a stable economic growth will help policymakers to stay focused on inflation and financial market stability. Moreover, Bank Indonesia has signaled that there is a risk inflation will exceed the target in the second half of this year, with an assumption of a recurrence in 2023.
Radhika Rao said that although core inflation is being monitored directly by policymakers, the ratio of inflation rate to interest rate remains under close observation. The focus of monetary policy is also expected to shift incrementally at the end of the third quarter.
“Policymakers should pay attention to and anticipate an acceleration in inflation,” Radhika Rao said as a final observation.
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