Indonesia’s Economic Recovery from COVID-19 Crisis Tougher than Expected at 3.51% in Q3-2021
On Friday 5 November 2021 Indonesia’s Statistical Agency (BPS) released the official Q3-2021 gross domestic product (GDP) data for Indonesia. While we had predicted a mediocre performance (based on the country’s lackluster retail sales, consumer confidence, credit growth and low inflation in this year’s third quarter), the figure was still below our forecast.
The data show that Indonesia’s economy expanded 3.51 percent year-on-year (y/y) in the third quarter of 2021.
Most analysts and policymakers had put their growth outlooks in the range of 4.0 – 4.5 percent (y/y), and so we can certainly argue that this official figure is somewhat disappointing. On the other hand, we have repeatedly warned that the recovery from the COVID-19 crisis goes slower than (initially) assumed.
Meanwhile, having the fresh Q3-2021 GDP data in hand, we can now also set a more accurate forecast for Indonesia’s full-year 2021 economic growth. Expecting a GDP growth figure of 4.0 – 4.5 percent (y/y) in Q4-2021, our full-year outlook is now set at 3.5 percent (y/y). Previously, we had this outlook in the range of 2.5 – 3.5 percent.
Global Picture
When we take a quick look at the global circumstances, then we detect a couple of trends in Q3-2021. First of all, international trade has been strong, surpassing pre-COVID-19 crisis levels. Moreover, commodity prices have been strong on the back of robust demand, with palm oil, coal, coffee, cocoa, tin, nickel, and aluminum (both on a quarter-on-quarter level and year-on-year level). As we shall see below, Indonesia posted a great export performance (being a key commodity exporter).
However, in Q3-2021 we also saw the normalization of economic growth (after most countries had recorded very sharp economic growth in the preceding quarter thanks to the low base effect; having experienced their rock bottoms in the COVID-19 crisis in Q2-2020). So, countries’ Q3-2021 growth fell sharply from their Q2-2021 growth.
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Order this article (or the November 2021 report in which it is included) - by sending an email to [email protected] or a message to +62.882.9875.1125 (including WhatsApp) - to read the full text. This article about Indonesia's Q3-2021 GDP discusses:
- Economic growth in Indonesia's key trading partners
- Indonesia's lackluster household consumption
- Private and public investment in Indonesia
- Impressive export performance of Indonesia
- Government consumption in Indonesia
- The sectors of the Indonesian economy that grew sharpest
- Economic growth per region across Indonesia
- Forecast for Indonesia's Q4-2021 and FY-2021 economic growth
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