Before we zoom in on the GDP data, we can inform that household consumption and exports were the key sources of growth for Indonesia in the first quarter of 2023.

Another remark we need to make here is that economic growth has now normalized to a large extent. The COVID-19 crisis, which gave rise to an unprecedented decline in consumption, production, investment, trade and traveling amid the government’s social and business restrictions, had first caused weak economic activity against a high base (hence we see contracting GDP between Q2-2020 and Q1-2021 in table 1).

However, once economic activity started to recover (while at the same time enjoying a low base), GDP growth was able to touch levels that were higher than normal (with Q2-2021 – showing a growth rate of 7.08 percent y/y – being the best example).

In fact, with a GDP growth rate of 5.46 percent (y/y) in Q2-2022, we can argue that Indonesia will have more difficulty to set an economic growth rate that is above five percent (y/y) in Q2-2023 (because the base is still a bit higher).

Table 1 shows that under normal circumstances Indonesia’s economic growth was sort of on auto-pilot at around 5.0 percent (y/y) in 2017-2019 (with Q4-2019 being slightly dragged down as China started feeling the COVID-19 crisis in that quarter). The table also shows that Q1 and Q4 have normalized with two subsequent years of growth around 5.0 percent (y/y). Q2 and Q3, on the other hand, still need some time to normalize as those were the quarters that were affected the most by the crisis.

Meanwhile, we also like to point out at the start of this article that our projection for full-year 2023 economic growth of Indonesia remains at 5.0 percent (y/y).


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