JAKARTA – Indonesia’s economic growth surged in the April-June quarter due to an export boom fueled by soaring commodity prices, according to official data released on Friday (Aug 5), but monetary tightening, rising inflation, and the prospect of a global recession loom large.
According to Statistics Indonesia, the second-quarter GDP was up 5.44 percent over the previous year, the strongest growth rate in a year. This exceeded the consensus prediction of a 5.17 percent increase in a Reuters survey, as well as the 5.01 percent annual growth in the first quarter.
Exports increased by nearly 20% year on year, up from 16.22% in the previous quarter, which the statistics bureau described as “outstanding.”
Household consumption, which accounts for more than half of GDP, recovered further when the COVID-19 limitations were lifted, with the Eid al-Fitr holiday in May providing a further boost. Investment, though, has stagnated.
Food and beverage, mining, construction, and transportation and warehousing industries grew quicker than in the preceding period.
However, Indonesia’s central bank stated last month that the increase in full-year 2022 GDP from 2021 will be at the lower end of a range of 4.5% to 5.3%. It had previously predicted growth in the middle of this range.
It lowered its projection because a global economic downturn would hurt exports and a rise in domestic inflation would hinder the rate of consumption recovery.
Consumer prices rose 4.94 percent year on year in July, marking a seven-year high and leading economists to urge for Bank Indonesia to raise interest rates from pandemic-era lows.