Indonesia’s economy saw a growth of 5.11% year-on-year in the first quarter of the year, up from 5.04% in the previous quarter, according to the country’s statistics agency.
Economists surveyed by Reuters had forecasted a median growth of 5% for the first quarter.
Household consumption, which accounts for half of Indonesia’s economy, increased by 4.91%, buoyed by expenses related to Ramadan, including transportation, food, dining out, and accommodation.
Amalia Widyasanti, acting chief at Statistics Indonesia, highlighted the continued decline in prices of Indonesia’s main export commodities such as crude palm oil and coal. Despite this, Indonesia’s economy grew solidly at 5.11%, driven by robust domestic economic activity.
On the production side, mining, processing industries, construction, and trade were the main contributors to growth. Household spending was the major contributor to consumption, supported by activities related to the presidential elections in February.
Regions like Kalimantan, Sulawesi, Maluku, and Papua islands recorded higher growth rates than the national average, primarily due to the mining and metals processing industries.
Bank Indonesia had previously stated its expectation for growth in the first two quarters of 2024 to surpass the final three months of 2023, fueled by increased household consumption during Ramadan and the Eid holiday.
Government spending surged by 19.9%, driven by election financing. Expenditure related to February’s presidential and legislative elections significantly boosted the economy.
However, exports only grew by 0.5% year-on-year, impacted by lower commodity prices affecting major exports like coal, palm oil, and nickel.
Indonesia’s GDP growth rate slowed to 5.05% in 2023 from 5.31% the previous year, mainly due to sluggish exports. The central bank has forecasted a growth rate of 4.7% to 5.5% for 2024.
Hosianna Situmorang, an economist at Korea Investment Asset Management Indonesia, noted that despite global economic challenges and high inflation, the increase in household consumption reflects the maintenance of Indonesian people’s purchasing power. Looking ahead, she forecasts Indonesia’s economy to grow around 5% to 5.2% in 2024, with ongoing attention to global challenges like the Israel-Iran conflict and the direction of U.S. interest rates.
