English
Indonesia’s GDP growth gained speed in Q2 on record exports
BENGALURU: Indonesia’s economy likely accelerated last quarter, buoyed by strong exports and private consumption, but a slowdown in China and the threat of a global recession pose significant risks in coming months, a Reuters poll found.
With rising global commodity prices, the resource-rich country has been enjoying an export boom. Its trade surplus in 2022’s first half was the highest on record at $24.89 billion, more than double that of the same period in 2021.
Southeast Asia’s largest economy grew 5.17% in the April-June period compared with the same three months a year earlier, the median forecast of 22 economists polled July 25-Aug. 2 showed.
On a quarter-on-quarter basis, the economy was predicted to have risen 3.44% last quarter from the previous three-month period, which saw a contraction of 0.96%, according to a smaller sample of 10 economists.
“Daily new (coronavirus) cases remained under control and domestic activity continued to improve in the June 22 quarter. The quarter also had Ramadan and we expect robust sequential momentum for private consumption,” wrote Frederic Neumann, co-head of Asian economics research at HSBC.
“Windfall tax revenue from high commodity prices continued to support government spending. However, almost a month-long palm oil export ban in May will likely cause exports growth to contract sequentially.”
A separate Reuters poll found GDP growth would be 5.1% this year, within Bank Indonesia’s estimate of 4.5% to 5.3%, and moderate only slightly to 5.0% in 2023.
Inflation has been of little concern to Indonesia’s central bank so far, despite rising to a 7-year high in July.
Bank Indonesia Governor Perry Warjiyo said on Monday core inflation was below the Bank’s 2.99% forecast and that policy would be determined by the core inflation rate and economic growth.
“We believe that BI will hike its key benchmark rate this quarter as core inflation has been increasing persistently since October 2021,” noted Irman Faiz of Bank Danamon.
“The rate hike would help slow down the coming inflation pressure and help stabilize IDR (the Indonesian Rupiah) without harming the growth recovery.” – Reuters