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Albeit still at an admirable level, Indonesia’s economic growth rate fell slightly short of expectations in the third quarter of 2024 (Q3-2024). Based on the data released by Indonesia’s Statistical Agency (Badan Pusat Statistik, BPS) on 5 November 2024, Indonesia’s gross domestic product (GDP) grew by 4.95 percent year-on-year (y/y) in Q3-2024.
In another article (available in this monthly report) we present a detailed analysis of Indonesia’s economic growth in Q2-2024 (which came in at 5.05 percent year-on-year), based on the gross domestic product data that were released by the Statistical Agency (Badan Pusat Statistik, BPS) in early August 2024.
The macroeconomic data that were released by Indonesia’s Statistical Agency (BPS) on Monday 6 May 2024 were largely in line with our expectations. BPS announced that the nation’s gross domestic product (GDP) growth was recorded at 5.11 percent year-on-year (y/y) in Q1-2024, which is within our projection of 5.1–5.2 percent.
The macroeconomic data that were released by Indonesia’s Statistical Agency (BPS) on Monday 5 February 2024 were largely in line with expectations. However, there is some room for concern as Indonesia’s household consumption wasn’t as strong as we hoped it to be amid the festive season (Christmas and New Year celebrations).
While we had hoped to see Indonesia’s gross domestic product (or GDP) growth rate at 5.0 percent year-on-year (y/y) in the third quarter of 2023 (Q3-2023), it was not a real surprise to see the growth rate fall slightly below that level.
Indonesia’s Statistical Office (Badan Pusat Statistik, or BPS) shared some great news on 7 August 2023. The agency announced that Indonesia’s gross domestic product (GDP) expanded by 5.17 percent year-on-year (y/y) in the second quarter of 2023. This was better than most forecasts, including our projection of 4.9 percent (y/y).
Despite the challenging international conditions (aggressive monetary tightening in the United States, the Russo-Ukrainian war, stagflation, a looming recession across the West, and weak growth in China) and a significant rise in the prices of subsidized fuels on 3 September 2022, Indonesia posted another solid economic growth rate.
Over the past decade or so many analysts – including us – have pointed out that the structural deficit in Indonesia’s current account balance is a serious weakness.
On Friday 5 November 2021 Indonesia’s Statistical Agency (BPS) released the official Q3-2021 gross domestic product (GDP) data for Indonesia. While we had predicted a mediocre performance (based on the country’s lackluster retail sales, consumer confidence, credit growth and low inflation in this year’s third quarter), the figure was still below our forecast.
On 5 May 2021, Indonesia’s Statistical Agency (Badan Pusat Statistik, BPS), released the latest gross domestic product (GDP) data of Indonesia, covering the first quarter of 2021. As expected, the economic recession persisted into Q1-2021 for Southeast Asia’s largest economy.
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Investors are awaiting a series of fiscal incentives from the Indonesian government, including a new tax holiday. Meanwhile, investors also urge the government to improve the investment and business climate by simplifying the process and procedures to obtain permits for investment projects. This also includes improving the coordination between central and regional authorities, for example through the integration of the permitting process at both levels.
Adhi Lukman, Chairman of the Indonesian Food and Beverage Association (Gapmmi), says he is optimistic that the investment targets that are set by Indonesia's Industry Ministry will be met this year. The Industry Ministry targets to see a total of IDR 63.25 trillion (approx. USD $4.6 billion) worth of private sector investment in the food and beverage industry of Indonesia, up 6.7 percent compared to investment realization in this industry one year earlier.
Indonesia continued to climb sharply in the World Bank's Doing Business Index. In the 2018 edition, which was released at the end of October 2017, Indonesia ranks 72nd, jumping 19 positions from being 91st in last year's ranking. The World Bank praised Indonesia and labelled it as the country that made the biggest improvements in business regulations among Asia Pacific nations since 2005.
In order to boost overall economic expansion as well as growth of several local industries, it is important for the city of Yogyakarta - located in the center of Java island - to see more infrastructure development. The local government has the crucial task to either invest directly in infrastructure development or to encourage private investment in infrastructure development by safeguarding a conducive regulatory environment and attractive investment environment.
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It is worrying that of total foreign investment commitments in Indonesia, only about 50 percent becomes actual investment. The other half decides - after initially being interested - not to pursue investment in Indonesia. Although not in all cases, it is believed that Indonesia's difficult investment climate scares away part of the (potential) investment community, specifically bureaucracy (red tape) and the lack of sufficient hard and soft infrastructure.
Thomas Lembong, Head of Indonesia's Investment Coordinating Board (BKPM), said the 5.01 percent year-on-year (y/y) economic growth pace of Indonesia in the second quarter of 2017 was rather disappointing as consumption remained bleak. Only Indonesia's export and investment realization showed an improvement, Lembong added. But, overall, Indonesia's economic growth stagnated.
With the Indonesian economy estimated to expand at a stable pace of 5.0-6.0 percent year-on-year (y/y) in the years ahead, the country's supply of energy needs to be raised. If not, businesses will increasingly be plagued by blackouts, while the price of energy rises (causing growing production costs). The upstream oil and gas industry - that involves exploration, development and production - therefore has a vital role to play in Indonesia's energy supply and economy.
The Investment Coordinating Board of Indonesia (in Indonesian: Badan Koordinasi Penanaman Modal, or BKPM) reported that total direct investment realization in Indonesia was recorded at IDR 170.9 trillion in the second quarter of 2017. This constitutes a 12.7 percent growth pace from IDR 151.6 trillion worth of total direct investment in the same quarter one year earlier. Thomas Lembong, Head of BKPM, said investment realization managed to absorb 345,323 Indonesian workers in Q2-2017.
Unilever Indonesia, one of the largest consumer goods producers in Indonesia, will continue to focus on the strengthening of its production lines. The company plans to invest up to USD $500 million over the next five years. Sancoyo Antarikso, External Relations Director & Corporate Secretary at Unilever Indonesia, said the funds will be used to expand production capacity of the company's nine factories across Indonesia.
