Another encouraging growth figure

INDONESIA - Report 30 May 2023 by Cyrillus Harinowo

The Indonesian economy posted an encouraging result for Q1 2023 GDP growth at 5.03% Y/Y, slightly above the 5.01% annual growth rate of Q4 2022. Compared to the previous quarter, the economy contracted by 0.92%, which followed the normal pattern. The fastest sector of growth in Q1 2023 was transportation and warehousing, at 15.93% Y/Y, while the hotel and restaurant sector grew by 11.55%. On the expenditure side, the fastest growth took place in the exports of goods and services, which grew by 11.68%.

By region, once again Eastern Indonesia achieved strong growth in Q1 2023; several provinces in the Eastern part of Indonesia have consistently grown at a faster pace than the other provinces.

The improvement of the economy was accompanied by a surplus of the current account for the quarter, albeit lower than that of the previous quarter. While in Q4 2022, the current account registered a surplus of $4,181 million or 1.27% of GDP, in Q1 2023 it registered a lower surplus of $2,972 million or 0.89% of GDP. At the same time, the financial and capital account of the balance of payments in Q1 2023 recorded a large surplus of $3,379 million. The substantial current account surplus combined with an equally significant surplus in the financial account led the overall balance of payments to record a surplus of approximately $6,517 million. The surplus of the balance of payments led foreign exchange reserves to rise to $145,189 million.

The Central Board of Statistics also released the balance of trade data for the month of April 2023. Exports decreased by 17.62% M/M to reach $19,290.5 million, with non-oil exports down by 18.33% to $18,031.8 million. At the same time, imports also fell, by 25.5%, to $15,347.7 million, resulting in a trade surplus of $3,942.8 million, another large surplus, in fact, even larger than the previous month's.

The Central Board of Statistics also released the inflation report, which showed that inflation has slowed significantly. In April, inflation was reported at 0.33% M/M. With that performance, Y/Y inflation stood at 4.33%, a level significantly lower than the previous month but still above the target corridor of the Central Bank. Given that performance, Bank Indonesia decided to keep the interest rate constant at its most recent Monetary Policy meeting.

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