By Veronica Dudei Maia Khongwir
BENGALURU (Reuters) – Indonesia's economy grew 5.0% in the fourth quarter from a year earlier, supported by robust domestic consumption, despite shrinking exports and falling commodity prices, according to a Reuters poll of 23 economists.
Growth in Southeast Asia's largest economy has been driven mainly by private consumption, which remains strong despite Bank Indonesia's cumulative interest rate hikes of 250 basis points since August 2022.
The survey median for last quarter's year-over-year growth of 5.00% was slightly faster than the 4.94% increase in the previous quarter. The latest data will be published on February 5th.
The economy grew 0.41% quarter-on-quarter in the October-December period, according to a smaller sample in the Jan. 25-31 Reuters poll.
“The current policy rate is not stringent enough to hinder economic growth as consumers' willingness to withdraw loans remains strong and we have seen good performance in consumption, working capital and investments,” said Irman Faiz, economist at Bench Danamon.
“Bank Indonesia is on the same page as us. They recorded stable growth last year, despite the global economic slowdown and decline in exports.”
The resource-rich country recently reported a decline in its trade surplus in 2023 as exports and imports fell due to falling commodity prices.
In addition, weak demand from China, Indonesia's largest trading partner, is increasing pressure on its exports.
“Monthly exports and imports fell year-on-year in the latest quarter, with the former hurt by weaker demand from China and other key export partners,” said Jeemin Bang, associate economist at Moody's Analytics.
“Indonesia's economic growth has been relatively stable in recent years and we expect this to continue. Furthermore, consumption growth will moderate from now on as the post-pandemic recovery has largely run its course.”
The economy is expected to have grown 5.0% in 2023 – within Bank Indonesia's estimate of 4.5% to 5.3% – and will do so at the same pace this year, according to a separate Reuters poll.
(Reporting by Veronica Dudei; Polling by Devayani Sathyan, Editing by Angus MacSwan)
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