Indonesia: Economy seen expanding 4.8% in 2022 – UOB

Economist at UOB Group Enrico Tanuwidjaja comments on the latest GDP figures in the Indonesian economy.

Key Takeaways

“The Indonesian economy grew 5.01% y/y in 1Q22, marking a steady start for the year but hardly better than 4Q21’s reading of 5.02%. It was above our forecast of 4.90%. All expenditure components grew except for government consumption, which posted quite a contraction.”

“Household consumption posed fourth straight quarters of positive gains since 2Q21, similarly for investment spending. Since expansionary fiscal policy begun during the start of COVID19 pandemic in 2Q20 and registered strong growth in the next six quarters thereafter, government spending contracted for the first time, marking the start of fiscal consolidation. Exports and imports continue to register double-digits growths in 1Q22, though momentum has slowed to half of that seen in 4Q21.”

“Nevertheless, with upside inflationary pressures posing risks of an all-round recovery in consumer demand, growth momentum is likely to slow in quarters to follow. We keep our GDP growth forecasts of 4.8% for 2022 and 5.0% for 2023.”