© Reuters. FILE PHOTO: Trucks drive past stacks of containers at the Tanjung Priok port in Jakarta, Indonesia, February 3, 2023. REUTERS/Ajeng Dinar Ulfiana/File Photo
By Veronica Dudei Maia Khongwir
BENGALURU (Reuters) – Indonesia’s economy grew 5.0% in the fourth quarter from a year earlier, supported by resilient domestic consumption, despite exports shrinking and commodity prices falling, a Reuters poll of 23 economists found.
Growth in Southeast Asia’s largest economy was mostly driven by private consumption which remains strong against a cumulative 250 basis points of interest rate hikes by Bank Indonesia since August 2022.
The poll median for 5.00% growth last quarter from the previous year was slightly faster than the 4.94% expansion in the preceding quarter. The latest data will be released on Feb. 5.
On a quarter-on-quarter basis, the economy grew 0.41% in the October-December period, according to a smaller sample in the Jan. 25-31 Reuters poll.
“The current policy rate is not tight enough to hinder economic growth because consumer appetite to withdraw loans remains robust and we saw good performance in terms of consumption, working capital and investment”, said Irman Faiz, an economist at Bank Danamon.
“Bank Indonesia is on the same page with us, they are seeing resilient growth last year, despite the global economic slowdown and export contraction.”
The resource-rich country recently reported a fall in its 2023 trade surplus as exports and imports dropped amid falling commodity prices.
Furthermore, weak demand from China, Indonesia’s biggest trading partner, adds more pressure on its exports.
“Monthly exports and imports fell in year-on-year terms throughout the last quarter, the former being hit by weaker demand from China and other major export partners,” said Jeemin Bang, an associate economist at Moody’s (NYSE:) Analytics.
“Indonesia’s economic expansion has been relatively stable in recent years, and we expect this to continue. Moreover, consumption growth will moderate from here, with the post-pandemic recovery largely run its course.”
The economy was forecast 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, a separate Reuters survey showed.
