Growth of 5.3%-5.5% likely for 2022; 2023 prospects look bright
Executive Summary
This report will reach the readers at the end of the year of 2022. Therefore, in ending the year 2022 for the Indonesian economy, it can be concluded with high notes.
The first high note was on the growth of the economy. IMF Managing Director in the middle of this year said that in the midst of darkening global crisis, Indonesia was painted an optimistic outlook. Indonesian economy grew respectably in the past three quarters reaching a yearly rate of 5.40% in which Q3 alone reached a yearly growth of 5.72%. Various sector performed very well this year, with a special note on the tourism sector as reflected by the high growth in the transportation sector as well as in the hotels and restaurants sector. From the demand side, exports were the prime engine of the economic growth followed by investment. Investment activities continued in high pace especially in the nickel related activities.
Another high note was on the Balance of Trade performance. Central Board of Statistics in Indonesia released its Balance of Trade Report for the month of November 2022. The Trade Balance in that month was reported by the Central Board of Statistics to display another large surplus, albeit lower than the previous month. The surplus in November 2022 was at $5,158.7 million compared to $1,005.7 million achieved in November 2021. The total trade surplus for the first eleven months of 2022 was at $50,593.9 million, 47% higher than $34,413.8 million achieved in the same period of the previous year. This is a record beyond our imagination.
One side of the Trade, which is Exports, also became one of our high notes. Exports for November of 2022 reached $24,120.7 million while imports in that month reached $18,962 million. The cumulative exports between January to November 2022 reached $268,177.9 million, grew by 28.1%, while cumulative imports for the same period reached $217,584 million. The cumulative amount of exports until November 2022 broke a record. In fact, the cumulative exports in the previous year already broke a record. Therefore, the record breaking exports for this year were really remarkable if not to say spectacular.
Another high note was on the battle against inflation. The Central Board of Statistics reported the Consumers Price Index for the month of November 2022 which resulted in a minor inflation of 0.09%. With that monthly performance, the year on year inflation rate up to November 2022 already reached 5.42%. With that yearly inflation, and in response of the Fed interest rate hike, the Indonesian Central Bank once again raised the bench mark interest rate by 25 basis points to 5.50% at the Monetary Policy Meeting on December 2022.
Another high note was on the Indonesian banking industry. Despite increasing the bench mark rate, loan growth on the Indonesian banking industry continued to move on a high pace. As of October 2022, the yearly loan growth reached 11.95%, higher than the loan growth of the previous year. At the same time loan at risk, which was high during the pandemic, has been significantly trending down. Therefore, Indonesian banking industry recorded very high increase in its profitability this year.
The last high note was on the Government Finance performance. Up to Q3 of 2022, Indonesian Government Finance showed very positive development. In total, up to September 2022, Indonesian Government Finance still recorded a surplus of Rp.60.9 trillion. Government revenue posted 87.1% from its yearly budget while its expenditures reached 61.6% from the yearly budget. This situation put Indonesian Government Finance in a very comfortable position for reaching a deficit that should approach 3% of the GDP this year.
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