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Taming Indonesia's inflation to pave way for stronger growth recovery
The release of Indonesia's economic data this week raises hopes for continuing recovery and a strong performance in the last quarter of 2022. Despite Q3 growth moving at a slower pace than Q2, we need to note that growth of 5.72 percent was achieved even after the government increased fuel prices in early September.
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A resident carries a box of groceries during a subsidized market day at Sleko Market in Madiun, East Java, on Oct. 30. The East Java administration sold rice at Rp 52,000 (US$3.34) per kilogram, cooking oil at Rp 12,500 per liter and sugar at Rp 12,000 per kg amid global and domestic inflation pressures. (Antara/Siswowidodo)
T
he release of the latest Indonesian economic data this week raises hope for continuing recovery and a strong performance in the last quarter of 2022. Despite growing at a slower pace quarterly than Q2 2022, we need to note that growth of 5.72 percent was achieved even after the government increased fuel prices in early September.
This robust performance now faces its final challenges in the last quarter of 2022, which come from raising inflation and interest rates on the domestic side as well as tension from geopolitical pressures that may lead to further global fluctuations.
Overall, we praise the effort of the government and central bank to ensure our economy remains in expansionary territory.
On a sectoral basis, both the trade and manufacturing sector still experience a relatively strong performance. Meanwhile, transportation and warehouse-related services do not seem significantly affected by the fuel price hike in September. On a quarter-to-quarter (qtq) basis, the sector grew slower but again it is still a positive figure.
There could be a silver lining for Indonesia's economy toward this year’s final quarter as the tourist sector continues to mark robust performance. Foreign tourist arrivals and the hotel occupancy rate kept growing in September, even after the raised fuel prices.
We expect those numbers will continue improving as mobility restrictions ease and because of the Group of 20 Summit later this month.
Although the number of domestic air passengers slightly dropped to 4.1 million passengers in September, railway passengers posted growth of 5.27 percent compared with August.
