Indonesia’s GDP growth on track amid mounting global uncertainty

INDONESIA’S economy grew more than 5 per cent last quarter, thanks to robust trade and domestic demand.

Gross domestic product (GDP) grew 5.44 per cent in the 3 months to June from a year ago, the statistics bureau said in Jakarta on Friday (Aug 5). That is faster than the median estimate of 32 economists in a Bloomberg survey for a 5.17 per cent gain. Compared with the previous quarter, GDP expanded 3.72 per cent, beating consensus for a 3.47 per cent rise.

Southeast Asia’s largest economy is steadily gaining momentum after a broader reopening and booming exports. That could give the central bank, which has kept borrowing costs at pandemic-era lows, more scope to focus on fighting inflation that’s now at a 7-year high.

While the government has been fending off price pressures through subsidies to cushion the impact of higher energy costs, data shows underlying inflation is inching higher. The core inflation measure tracked by Bank Indonesia quickened 2.86 per cent in July, closer to the midpoint of the central bank’s 2-4 per cent target range.

Still, policymakers may tread with caution due to global recession risks sparked by an aggressive monetary tightening in the US and stumbling growth in China. Bank Indonesia recently projected that GDP growth could tilt below the midpoint of its 4.5-5.3 per cent target range this year amid uncertainty to the global outlook. BLOOMBERG