Reuters poll suggests that Indonesia’s Q2 GDP growth is likely to decrease due to weakened exports

A man walks past stacks of containers of Tanjung Priok port in Jakarta, Indonesia, February 3, 2023. REUTERS/Ajeng Dinar Ulfiana/File photo

Indonesia’s economy experienced a modest growth of 4.93% year-on-year in the second quarter of 2023, marking its slowest growth since the third quarter of 2021. The growth was primarily dampened by weakening global demand for Indonesian exports. This data was derived from a median forecast of 22 economists polled by Reuters.

In terms of quarterly growth, the economy is projected to have expanded by 3.72% in the April-June period, based on a smaller sample of forecasts received in a July 31-August 3 poll.

In the previous quarter, Indonesia’s economy grew by 5.03% compared to the same period last year, but experienced a quarter-on-quarter contraction.

The country’s gross domestic product (GDP) data for the second quarter will be officially published on August 7.

Despite recording a large trade surplus in June, Indonesia’s surplus for the first half of 2023 remained below that of the previous year. Additionally, the country’s exports have slowed down, with prices decreasing for commodities like palm oil.

A separate Reuters survey revealed that Indonesia’s GDP growth is expected to average 4.9% this year, within the range of Bank Indonesia’s estimate of 4.5% to 5.3%. The forecast suggests a slight increase to 5% in 2024.

“Economic activity is gradually returning to normalcy after the sharp contraction during the pandemic. However, the high growth recorded from a low base is not sustainable as the economy approaches its pre-pandemic trend,” stated Kunal Kundu, an economist at Societe Generale. He also expressed concerns about Indonesia’s economy, as its pre-pandemic growth rate of around 5% was not sufficient for the country’s needs.

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