A record rise in car exports

INDONESIA - Report 30 Jan 2023 by Cyrillus Harinowo

The Indonesian economy posted an encouraging result for Q3 2022 with GDP growth of 5.72%, significantly higher than 5.44% achieved in the previous quarter. One of the main contributors to this growth was the rise in exports. In 2022, Indonesian exports reached $292 billion, a record level.

Indonesia's export performance has indeed been astonishing. Rising from $232 billion in 2021, Indonesian exports grew by over 25% in 2022, at a time when the global economy has been on the downturn. In addition to the rise in commodities, Indonesian car exports also displayed a strong surge last year. That performance further strengthened Indonesia's capacity as one of the global car manufacturers, similar to Thailand.

Indonesian car exports had experienced a sharp downturn in 2020 before rebounding in 2021. Last year, Indonesian car exports grew at a rate that surpassed their record in 2019 of 332,000 units.

The Central Board of Statistics recently released the balance of trade data for the month of December 2022. Exports decreased marginally by 1.10% M/M and reached $23,828.1 million in December 2022, with non-oil exports down by 2.73% to $22,352.4 million. At the same time, imports increased considerably, by 5.16%, to reach $19,939.8 million. This resulted in a trade surplus of $3,888.3 million, a substantial surplus, although much lower than in previous months.

The Central Board of Statistics also released the inflation report, which showed that inflation paused in its slow move higher. December 2022 inflation rose 0.66% M/M. With that performance, Y/Y inflation stood at 5.51%, a level lower than the previous month but still above the target corridor of the Central Bank. However, the Central Bank was also influenced by the rise in the Fed Funds rate of 50 basis points during the US Fed's most recent meeting, in December 2022. Based on those considerations, Bank Indonesia decided to raise the benchmark interest rate by 25 basis points to a level of 5.75% at its Monetary Policy Meeting in January 2023.

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