Indonesia Economic Growth Accelerated as Household Consumption Increases
Reports show that in 2022, Indonesia experienced its strongest economic growth in the past nine years. This was mostly thanks to the easing of COVID-19 restrictions and a global community boom that allowed the exports to reach a record high.
The high global commodity prices aided the rupiah and improved Indonesia’s current account. However, growth momentum slowed in the final quarter as prices moderated.
Numbers Very Positive When Compared to Last Year
According to Statistics Indonesia data released on Monday, Indonesia’s economy expanded by 5.31% in 2022. This is the best annual growth rate since 2013, when the number was 5.7%. In contrast, it stood at 3.69% in 2022.
Household consumption, which accounts for over half of Indonesia’s GDP, accelerated last year. It was particularly boosted by travel-related spending as Covid-19 restrictions eased. This means that the increased vaccination rates also played a part in it.
In 2022, investment grew by 3.87%, similar to 2021’s growth, but has yet to return to pre-pandemic levels, according to the statistics bureau. Exports grew on the back of soaring commodity prices after the Russia-Ukraine war began in February. Indonesia is a significant supplier of thermal coal, palm oil, and nickel steel, and its shipments reached a record high of $292 billion last year.
Government Spending Also Goes Down
Meanwhile, government spending in 2022 contracted as Jakarta started to ease back from pandemic-era health and social spending. This year’s growth is expected to be supported by household consumption while keeping inflation under control and continued improvement in people’s mobility. Jakarta has set a target of 5.3% for economic growth in 2023, but Finance Minister Sri Mulyani Indrawati said last week that GDP growth would be slightly below that rate in 2022.
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