Another spike in growth
The Indonesian economy posted an encouraging result for Q3 2022, growing by 5.72% Y/Y. This is significantly higher than the 5.44% achieved in the previous quarter. In fact, the rate of growth also exceeded the consensus.
Compared to the previous quarter, the Indonesian economy also expanded, by 1.81%. The fastest sector growth in Q3 2022 was in transportation and warehousing, at a rate of 25.81%, followed by the hotels and restaurant sector, which grew by 17.83%. These two sectors combined highlight the fast recovery of the tourism sector in the country, driven by a combination of domestic as well as international tourism.
The improvement of the economy was accompanied by a surplus of the current account for the quarter, larger than the previous quarter. While in Q2 2022, the Indonesian current account registered a surplus of $3,853 million or 1.14% of GDP, in Q3 the current account reported a larger surplus of $4,376 million or 1.28% of GDP. At the same time, the financial and capital account in the balance of payments recorded a larger deficit, of $6,073 million. The large surplus in the current account combined with deficit in the financial account led the overall balance of payments to register a deficit of approximately $1,304 million. The deficit in the balance of payments led foreign exchange reserves to decline to $130,782 million.
The Central Board of Statistics also released the balance of trade data for October 2022. Exports increased marginally, by 0.13% M/M, reaching $24,809.2 million, with non-oil exports down by -0.14% to $23,434.1 million. At the same time, imports fell slightly, by 3.40%, to $19,135.3 million, resulting in a trade surplus of $5,673.9 million — another large surplus, even larger than the previous month.
The Central Board of Statistics also released the October inflation report, which showed that inflation paused its upward path. In October, the index reported deflation of 0.11% M/M. With that performance, Y/Y inflation stood at 5.71%, lower than the previous month but still above the target corridor of the Central Bank. The Central Bank was also motivated by the rise in the Fed Funds rate of 75 basis points at its latest meeting. Based on those considerations, Bank Indonesia decided to raise the benchmark interest rate by 50 basis points to a level of 5.25% at its meeting in November 2022.
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