Indonesia’s Q2 GDP growth likely slows as exports weaken – Reuters poll

A man walks past stacks of containers of Tanjung Priok port in Jakarta, Indonesia, February 3, 2023. REUTERS/Ajeng Dinar Ulfiana/File photo

BENGALURU – Indonesia’s economy likely grew 4.93 percent from a year earlier in the April-June quarter, the slowest since the third quarter of 2021, due to weakening global demand for its exports, according to the median forecast of 22 economists polled by Reuters.

On quarter-on-quarter basis, the economy was expected to have grown 3.72 percent in the June quarter, according to a smaller sample of forecasts received in the July 31-Aug.3 poll.

In the January-March quarter the economy grew 5.03 percent from a year ago but reported a quarter-on-quarter contraction.

The gross domestic product data will be published on Aug. 7.

Despite recording a large trade surplus in June, the surplus for the first half of 2023 remained below last year’s. And exports have slowed, with prices dropping for palm oil and other commodities sold by the resource-rich country.

Indonesia’s gross domestic product (GDP) growth was expected to average 4.9 percent this year, within Bank Indonesia’s estimate of 4.5 percent to 5.3 percent, and then pick up slightly to 5 percent in 2024, a separate Reuters survey showed.

“Economic activity is starting to normalize after the rebound from the sharp pandemic contraction…the high growth recorded from the low base will not be sustainable as the economy moves back closer to the pre-pandemic trend,” noted Kunal Kundu, an economist at Societe Generale.

“Indonesia’s economy had barely been growing at 5 percent y-o-y sustainably before the pandemic, and the post-pandemic recovery phase has proven to be incapable of pushing the economy much beyond that threshold. We consider that level well below what the country needs.”