Indonesia’s Statistical Office (Badan Pusat Statistik, or BPS) shared some great news on 7 August 2023. The agency announced that Indonesia’s gross domestic product (GDP) expanded by 5.17 percent year-on-year (y/y) in the second quarter of 2023. This was better than most forecasts, including our projection of 4.9 percent (y/y).
A quick look at the data shows that household consumption was particularly strong in Indonesia in Q2-2023. Meanwhile, government consumption also grew strongly, albeit its contribution to the whole national economy is quite modest.
Indeed, table 1 shows that the growth rate in Q2-2023 was not as impressive as the rate of 5.46 percent (y/y) in the same quarter one year earlier. However, we need to realize that economic growth has normalized to a great extent after the heavy shake-up brought about by the COVID-19 crisis (as well as the impressive rebound from the crisis), and so we are now seeing growth rates that are very close to ‘normal’ (if they’re not normal already) as the low and high base effects wane.
Meanwhile, we also like to point out at the start of this article that our projection for full-year 2023 economic growth of Indonesia remains at 5.0 percent (y/y). After the Q2-2023 data we have in fact become even more convinced about this projection.
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