What Do the Latest Macroeconomic Data of Indonesia Inform Us About Economic Growth in Q3-2024?
As usual, we look at the latest available macroeconomic data of Indonesia to assess the strength of the national economy. Those who follow this monthly article should know that we are quite optimistic about the Indonesian economy as the majority of data are showing positive trends.
And although the external environment remains uncertain with geopolitical turmoil in the Middle East and Eastern Europe as well as a tense political election in the United States and shaky Chinese economy, there did occur an important change in mid-September 2024 that should boost growth.
That change refers to the US Federal Reserve’s decision to cut its benchmark interest rate by 50 basis points (bps) in mid-September 2024. Bank Indonesia saw this rate cut coming, hence had already cut its own benchmark interest rate by 25 bps to 6.00 percent a few hours before the Fed did. Meanwhile, markets seem to expect more rate cuts in the near future, implying borrowing costs are easing, hence there exists room for accelerated economic activity. Although it typically takes a few months for lower interest rates to be felt in the real economy, the effect could be felt as early as Q4-2024.
Retail Sales of Indonesia
As usual, we start with Indonesia’s retail sales (which are sales of goods and services to consumers) as these give us valuable information about the purchasing power of Indonesian consumers. After all, when people experience difficult financial times (or expect to encounter difficult financial times in the near future), then they tend to cut back on spending. Considering household consumption is the biggest contributor to Indonesia’s economic growth, a hiccup in the nation’s retail sales could mean overall economic growth gets dragged down.
Based on the latest data from Indonesia’s central bank (Bank Indonesia), Indonesia’s retail sales grew 4.5 percent year-on-year (y/y) in July 2024, accelerating from the pace of 2.7 percent (y/y) in the previous month. In July 2024 it was particularly the food category that managed to support overall retail sales thanks to stable and low inflation, as well as government (aid) programs, such as cash transfers to the poor, ceiling prices on retail sales of specific food products (for example rice), and subsidy spending on basic necessities (staple crops) to allow affordable prices in society.
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This article discusses:
• Indonesian retail sales.
• Indonesia's consumer confidence.
• Credit growth in Indonesia.
• Tea consumption in Indonesia.
• Indonesian car sales.
• Indonesian motorcycle sales.
• Foreign visitor arrivals.
Take a glance inside the report here!
