BPS calculated a 0.74 percent year-on-year (y/y) contraction in Indonesian GDP in Q1-2021, which was slightly weaker than Indonesia Investments’ forecast of a 0.50 percent (y/y) contraction.

Nonetheless, it should mean that Indonesia exits the economic recession in Q2-2021. However, exiting the recession does not mean that the Indonesian economy is doing fine. On the contrary, there are plenty of reasons to remain concerned with economic activity remaining far from optimal in the quarters – perhaps even years – to come. Exiting the economic recession in Q2-2021 is primarily possible due to the so-called low base effect (as Indonesia hit rock bottom in the COVID-19 crisis in the second quarter of 2020).

Seeing the economic data that have been released by BPS since Q3-2020, we actually have the impression that Indonesia’s economic activity is going sideways or flat (not improving nor weakening on a quarterly basis). So, in other words, over the past three quarters (Q3-2020, Q4-2020 and Q1-2021) conditions have more-or-less been the same (whereas on an annual basis, the economic recession is easing due to the base effect). This flat performance particularly applies to household consumption, which is certainly no trivial matter considering household consumption accounts for about 57 percent of Indonesia’s total economic growth. And, we expect this trend to continue in Q2-2021 and Q3-2021 (possibly even longer) considering Indonesia (well, and the world) faces two major challenges in the COVID-19 crisis:


This update consists of 17 pages.

Our updates are available to subscribers of the Indonesia Investments report. To receive updates on crucial economic, political and social developments, you can request for further subscription details through info@indonesia-investments.com or +62(0).882.9875.1125 (including WhatsApp). This article can also be purchased separately for IDR 35,000

Look Inside the Update



Eugene de la Paz |

How can I get the complete report on this Q1-2021 GDP Update Indonesia: Economic Activity Remains Low But End of Recession In Sight?