When the archipelago fared better than most countries during last year’s global economic tumult, its outperformance was largely attributed to exceptionally high prices for key Indonesian export commodities.

Coal prices, for instance, shot up in early 2022 and stayed high before crashing back down as the year ended. Crude palm oil prices also spiked last year.

We felt very fortunate for the windfall but contained our excitement, for we knew that such a fortunate market environment would not last long.

Naturally, almost everyone assumed that our strong GDP growth would prove unsustainable once global prices for those goods came back down, or “normalized”, as Indonesian economists like to say.

The prices have normalized, but our GDP growth has not. It has now stayed above 5 percent for seven consecutive quarters.

The BPS data show that, unlike in the preceding few quarters, when our growth was strongly supported by net exports, the latest quarter saw net exports drag down the GDP growth figure, albeit marginally.

Net exports only accounted for 2 percentage points of Indonesia’s 5.04 percent GDP growth in this year’s first quarter. That contribution vanished completely in the second quarter, yet overall GDP growth did not decline and in fact increased to 5.17 percent.

We can conclude with relief that our economy appears to be less dependent on exports than many had assumed. It has proven quite resilient to a worsening external environment.

Whether it will stay that way is another matter, because part of the increased domestic expenditure that made up for the decline in net exports is temporary, such as increased spending by political parties, labor unions, social and cultural organizations as well as NGOs ahead of next year’s elections. Such spending jumped almost 9 percent year-on-year (yoy) in the second quarter.

The BPS data reveal government spending up almost 11 percent yoy in the second quarter as well.

In Indonesia, periods preceding general elections tend to see increased domestic spending by both organizations and consumers, with a noticeable impact on economic growth. After the elections, Indonesia’s economy will no longer be able to rely on this extra spending as a source of growth.

On the flipside, however, corporate spending often slows down ahead of elections as private sector decisionmakers hold back on large capital investment while they wait for clarity about the country’s future course.

It is quite plausible, for instance, that more investors for Indonesia’s future capital city will emerge once the country’s next administration commits to moving forward with the megaproject.

Hence, the overall GDP effect of the upcoming elections is hard to assess. In any case, we are happy to see growth.

There are more signs of resilience.

Last year around this time, Indonesia’s economy also proved less susceptible to global economic developments than many had anticipated. As central banks around the world, led by the United States Federal Reserve, embarked on a path of quantitative tightening to battle inflation, there was concern that capital flight from emerging economies would put massive pressure on the rupiah.

In the end, that concern seemed overblown.

Investors in Indonesia appear to be less fickle today than they were during the so-called taper tantrum a decade ago. As a result, the rupiah has held up better than many other emerging market currencies, and better than it did in 2013, when it dropped from around Rp 9,700 per US dollar to Rp 12,200.

Evidently, investor confidence in the long-term prospects of Indonesia and Southeast Asia trumps worries about short-term asset valuations.