The rise of Eastern Indonesia
The Indonesian economy posted an encouraging result for Q4 2022 with growth of 5.01%, although this was significantly lower than the 5.72% rate achieved in the previous quarter. GDP for full-year 2022 grew by 5.31%, at the bottom of the predicted range of growth.
Compared to the previous quarter, the Indonesian economy expanded by 0.36%. The fastest sectors of growth in Q4 2022 were transportation and warehousing, with a rate of growth of 16.99%, and hotels and restaurants, which grew by 13.81%. These two sectors combined underscore the fast recovery of the tourism sector in the country, on a combination of the domestic as well as international tourism.
Eastern Indonesia was able to achieve a higher rate of growth in 2022. In fact, several provinces in Eastern Indonesian in the past few years have consistently grown at a faster rate than the other provinces.
The improvement of the economy was accompanied by a surplus in the current account for the quarter, although it was slightly lower than that of the previous quarter. In Q3 2022, Indonesia's current account reported a surplus of $4,544 million or 1.34% of GDP, while in Q4 2022 the current account registered a surplus of $4,265 million or 1.3% of GDP. At the same time, the financial and capital account of the balance of payments in Q4 recorded a significantly smaller deficit of $489 million. The large surplus in the current account combined with the small deficit in the financial account led the overall balance of payments to a surplus of approximately $4,730 million. The surplus of the balance of payments led foreign exchange reserves to increase to $137,233 million.
The Central Board of Statistics released the balance of trade data for the month of January 2023. Exports decreased by 6.36% M/M and reached $22,313.3 million in January, with non-oil exports down by 6.84% to $20,826.1 million. At the same time, imports also decreased, by 7.15%, to reach $18,443.0 million. This resulted in a trade surplus of $3,870.3 million, another large surplus, although smaller than the previous month.
The Central Board of Statistics also released the inflation report, which showed that inflation has slowed. For the month of January 2023 inflation was reported at 0.34%. With that performance, Y/Y inflation stood at 5.28%, lower than the previous month but still above the target corridor of the Central Bank. Based on that consideration, Bank Indonesia decided to keep the benchmark interest rate at a level of 5.75% at its meeting in February.
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