Indonesia’s first-quarter growth boosted by election, holiday spending

JAKARTA — Indonesia’s economic growth accelerated in the first quarter of 2024 on the back of election and religious holiday spending, official data showed Monday.

Southeast Asia’s largest economy expanded 5.11 percent, Statistics Indonesia said, the highest level for three quarters and slightly higher than the 5.04 percent expansion in the same period last year.

The economy was boosted by government spending ahead of the country’s presidential election in February and household spending in preparation for the holy month of Ramadan and Eid al-Fitr in April, acting Statistics Indonesia head Amalia Adininggar Widyasanti said.

READ: Indonesian president tables $216-B budget for 2024

“Household consumption is still the biggest source of the growth in terms of spending,” she told a press conference.

Government estimates had projected growth of 5.17 percent but experts warned Jakarta’s official data might not be reliable to judge economic performance.

High interest rates weigh on demand

“We don’t have much faith in the official data. The Indonesia Activity Tracker suggests that although the economy has staged a recovery in recent months, growth is still below what official figures suggest,” said Gareth Leather, senior Asia economist at Capital Economics.

READ: Indonesia surprises by hiking interest rates to seven-year high

“We think the economy is set to struggle over the coming quarters as high-interest rates… weigh on demand. We expect GDP growth on our measure to be around 4.5 percent this year.”

Economists previously warned of a slowdown in growth in the coming months as officials tighten monetary policy and commodity demand continues to weaken.

Indonesia’s central bank last month announced a surprise interest rate hike to 6.25 percent, their highest for seven years, to support the rupiah, which had weakened against the dollar.