Growth remains solid
Indonesia's economy posted an encouraging result for Q3 2023, registering growth of 4.94%, only slightly lower than the 5.17% annual growth for Q2 2023. Compared to the previous quarter, the Indonesian economy expanded by 1.60%, which followed the regular cycle. While the growth rate for the Q3 was slightly lower than 5%, overall economic growth for the first three quarters of 2023 was still 5.05%.
The fastest sector growth in Q3 2023 was in transportation and warehousing, at 14.74%, followed by "other services", which grew by 11.14%. On the expenditure side, the fastest growth took place in capital formation (investment), which grew by 5.77%. By region, Eastern Indonesia once again achieved a high rate of growth in Q3 as several provinces in the Eastern part of Indonesia have consistently grown at a faster rate than the other provinces.
The improvement of the economy was accompanied by a smaller deficit of the current account for the quarter. While in Q2 2023, Indonesia's current account reported a deficit of $2,207 million or 0.63% of GDP, in Q3 the Indonesian current account registered a deficit of $860 million or 0.25% of GDP. At the same time, the financial and capital account of the balance of payments recorded a small deficit in Q3, of $290 million. The deficit in the current account combined with the small deficit in the financial account led the overall balance of payments to report a deficit of approximately $1,462 million. The deficit in the balance of payments led foreign exchange reserves to decrease to $134,856 million.
The Central Board of Statistics also released the balance of trade data for the month of October. Exports increased by 6.76% M/M to reach $22,148.4 million in October, with non-oil exports up by 7.42% to $20,776.8 million. At the same time, imports increased at slightly faster pace, by 7.68% to reach $18,672.8 million, resulting in a trade surplus of $3,475.6 million—another large surplus, and slightly higher than that of the previous month.
The Central Board of Statistics also released the inflation report, which showed that inflation has slowed significantly. In October, inflation was reported at 0.17% M/M. With that performance, Y/Y inflation stood at a level of 2.56%, in the lower part of the target corridor of the Central Bank. Given that performance, Bank Indonesia decided to keep the benchmark interest rate constant at 6.00%.
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