Indonesia’s economy has reached 9-year peak amid demand for resources
2023.02.06 02:38
Indonesia’s economy has reached a 9-year peak amid demand for resources
By Ray Johnson
Budrigannews.com – Last year, Indonesia’s economic growth reached its highest level in nine years. This was due to increased spending as a result of the lifting of pandemic restrictions and record exports caused by a global commodity boom.
After the war between Russia and Ukraine, which helped the rupiah and improved the country’s current account, high commodity prices around the world helped Southeast Asia’s largest economy. However, prices eased in the final quarter, and weaker global demand, high inflation, and an increase in interest rates may hinder activity this year.
Statistics Indonesia data from Monday showed that the economy grew by 5.31 percent in 2022. This was the highest annual growth rate since 2013 and was higher than the 5.29 percent that was predicted by a Reuters poll.
The annual growth of gross domestic product in the fourth quarter was 5.01 percent, compared to the poll’s prediction of 4.84 percent and the previous three months’ growth of 5.72 percent.
As COVID-19 restrictions eased, household consumption, which accounts for more than half of Indonesia’s GDP, accelerated last year, particularly supported by travel-related spending.
After daily cases decreased and vaccination rates increased, which increased household consumption, Indonesia removed most movement restrictions the previous year. At the end of the year, all of the other restrictions were removed.
The statistics bureau reported that investment increased by 3.87 percent in the previous year, similar to growth in 2021, but has not yet returned to pre-pandemic levels.
After the Russia-Ukraine war began in February, exports increased as a result of rising commodity prices. Nickel steel, palm oil, and thermal coal are all widely available from Indonesia.
Last year, the country’s shipments hit a record high of $292 billion.
As Jakarta began to return to spending on health and social services during the pandemic, government spending fell in 2022.
In anticipation of a global economic downturn that would result in a further decline in commodity prices and a slowdown in Indonesia’s exports, government officials have stated that economic activity may slow this year.
According to Bank Mandiri economist Faisal Rachman, “China’s economic reopening could support demand, but commodity prices are still prone to continued weakening amid prospects of increased supplies and lower demand in the U.S. and euro zone.”
Faisal stated that household consumption would likely support growth this year while inflation is under control and people’s mobility continued to improve, predicting growth of 5.04 percent in 2023.
Although Jakarta has set a goal for economic growth of 5.3 percent in 2023, Finance Minister Sri Mulyani Indrawati stated last week that GDP growth in 2022 would be slightly below that rate.
