Indonesia Q2 GDP growth highest in three quarters

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

JAKARTA  – Indonesia’s economic growth in the second quarter accelerated unexpectedly and came in above market predictions, despite its exports weakening amid falling commodity prices.

Southeast Asia’s biggest economy expanded 5.17 percent in the April-June quarter from the same period a year earlier, faster than the 4.93 percent growth expected by economists polled by Reuters and the highest growth rate in three quarters. First-quarter growth was revised up slightly to 5.04 percent.

On a quarterly, non-seasonally adjusted basis, GDP expanded 3.86 percent, compared with the poll’s prediction of 3.72 percent growth.

Indonesia’s post-pandemic recovery received a boost from a commodities-led export boom last year, but analysts expect momentum to cool as prices of its top products, like palm oil and coal, fall and global demand weakens amid interest rate hikes in many countries.

READ: Indonesia Q1 GDP beats forecasts on consumer, govt spending

Indonesia’s own monetary tightening of 225 basis points from August 2022 to January 2023, was also seen hurting domestic demand.

READ: Indonesia central bank keeps rates unchanged, as expected

Aiding GDP growth in the second quarter was household spending for the Muslim fasting month and Eid al-Fitr festivities, which fell in late April, analysts said.

Last year’s growth was 5.3 percent, a nine-year high. The government targets the same growth rate for 2023. The central bank predicts GDP will expand in a range of 4.5 percent to 5.3 percent this year.

READ: Indonesia’s June inflation eases to lowest in 14 months