Indonesia’s GDP Growth Reaches Nine-Year High

Indonesia’s economy grew last year at the fastest pace since 2013, marking the highest economic output since President Joko “Jokowi” Widodo took office. The country’s gross domestic product (GDP) rose by 5.31 percent in 2022, handily beating the preceding year’s 3.71 percent but failing to match the 2013 figure of 5.56 percent, Statistics Indonesia (BPS) reported on Monday. Economic output in the fourth quarter of last year increased by 5.01 percent from the equivalent period of 2021, much lower than the year-on-year (YoY) increase of 5.72 percent seen in the third quarter. The statistics agency attributed the slowdown to weaker purchasing power as a result of increased inflation in last year’s final quarter.

“Indonesia experienced solid economic growth in 2022,” BPS head Margo Yuwono told reporters in a press conference called to publish the latest GDP report.

The World Bank and the International Monetary Fund had expected Indonesia’s 2022 GDP growth to come in at 5.2 and 5.3 percent, respectively, while the Asian Development Bank had a bullish forecast of 5.4 percent. Household spending, long the backbone of the domestic economy, remains the main source of growth, contributing 2.61 percentage points (ppt) to the overall GDP growth rate.

This growth was driven by the improvement of community mobility along with the high rates of COVID-19 infections and removal of PPKM. Gross Domestic Product (GDP) based on valid prices reached Rp 5,114.0 trillion or based on constant 2010 prices reached Rp 2,988.6 trillion. Meanwhile, economic growth in the IV-2022 quarter was recorded at 5.01 percent or grew 0.36 percent.

The Head of the Central Statistics Agency (BPS) said that the Indonesian economy had returned to the Prapandemi level. This was supported by the purchasing power of the people last year which was well maintained and was also supported by the activities and mobility of the people who had recovered.

“The annual economic growth trend still grows 5% despite slowing down from the third quarter of 2022. This shows that the Indonesian economy grew solidly,” he said in a press conference on the BPS release, Monday (2/6/2023).

Indonesia’s economic growth is in accordance with the estimates of President Joko Widodo or Jokowi. The Head of State is optimistic that Indonesia’s economic growth in 2022 will reach 5.3% on an annual basis (year on year/yoy). The projection of Indonesia’s economic growth which reached 5.3% will place the Indonesian economy in the 1st rank among other G20 countries. For the record, the Indonesian economy grew 5.72 (yoy) in the third quarter of 2022 and 5.45% (yoy) in the second quarter of 2022. Meanwhile, the Indonesian market consensus of 12 institutions also estimated economic growth to reach 5.03% (yoy) and grew 0.49% compared to the previous quarter (Quarter to Quarter/QTQ).

February 6, 2023, The Jakarta Post, CNBC Indonesia