Economic Update Indonesia: Indonesian Economy Expands at Rate of 5.31% (Y/Y) in Full-2022

But even so, they were still a cause for celebration as the Indonesian economy performed well amid still troubled global conditions (for example Indonesia saw its foreign exchange earnings in the tourism industry decline heavily because relatively few foreign visitors opted for a trip to Indonesia in 2022, compared to pre-COVID-19-crisis times).

In full-year 2022, the Indonesian economy expanded at a rate of 5.31 percent year-on-year (y/y), which is the best full-year GDP growth rate since 2013. Obviously, we need to keep in mind that economic growth in 2022 enjoyed a low base as 2021 had been a COVID-19-crisis-ridden year (with harsher social and business restrictions).

Meanwhile, in the last quarter of 2022 the Indonesian economy showed a growth rate of 5.01 percent (y/y). This might be slightly disappointing for some, which could include Indonesian Finance Minister Sri Mulyani Indrawati as she – in late January 2023 – said to expect a higher Q4-2022 economic growth rate than in Q4-2021 as the latter was burdened by the arrival of the Omicron variant. One could also argue that after the severe COVID-19 hiccup (namely a deep-red crisis and huge rebound) matters have now normalized for the Indonesian economy.

Table 2 on the previous page shows a solid recovery from the COVID-19 crisis (when Indonesia hit rock bottom in 2020). Indonesia’s GDP at constant prices (with 2010 as base year), which is the most informative indicator as it is adjusted for the effects of inflation (and – as is widely known – inflation was higher than usual in 2022), shows a very healthy jump to IDR 11,710.4 trillion (approx. USD $780 billion) in full- 2022.

Based on current prices Indonesian inflation even expanded to IDR 19,588.4 trillion (approx. USD $1.30 trillion). However, this indicator is unadjusted for the effects of inflation, and therefore somewhat misleading.

Similarly, per capita GDP rose strongly to around USD $4,784. However, we need to keep in mind that there exists quite some inequality within Indonesian society. So, for example, it is highly probable that a small percentage of the population benefited disproportionally from the high commodity prices as their companies made windfall profits in 2022.

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