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GDP growth falls below 5 percent for first time since pandemic
Indonesia’s annual economic growth rate has fallen below 5 percent for the first time since the coronavirus pandemic due to a slowdown in domestic spending and a reduced trade surplus.
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A man fills jerricans with subsidized diesel fuel on Sept. 7, 2023 at a Pertamina gas station in Padang Seurahet village, West Aceh regency, Aceh. (Antara/Syifa Yulinnas)
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ndonesia’s annual economic growth rate has fallen below 5 percent for the first time since the coronavirus pandemic due to a slowdown in domestic spending and a decline in the trade surplus.
Statistics Indonesia (BPS) interim head Amalia Adininggar Widyasanti revealed that the country’s GDP in the third quarter of 2023 grew only 4.94 percent year-on-year (yoy), missing the government’s forecast of over 5 percent.
“Consumer spending was lower than in the previous quarter, because it normally reaches its peak in the second quarter,” Amalia told a press briefing on Monday.
BPS data show that Indonesian consumers spent 0.45 percent less in the third quarter than the previous quarter, while household spending was still up 5.06 percent yoy. However, that latter figure marks a slowdown from the 5.22 percent yoy growth recorded in the second quarter.
As a result, household spending contributed only 2.63 percentage points to the overall third-quarter growth of 4.94 percent. To compare, household spending contributed 2.81 and 2.77 percentage points to GDP growth to the first and second quarter, respectively.
Government spending, even though it accounts for only a small share of overall economic activity, also dragged down GDP growth in the third quarter as it came in 3.76 percent lower than in last year’s Q3.
Finance Minister Sri Mulyani Indrawati said in a separate press briefing on Monday that government spending always tended to be lower in the third quarter, because “some spending will only be realized in the fourth quarter”.
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