Indonesia’s economy grew slower than expected during the third quarter (Q3) of the year due to the covid-19 safety restrictions that hinder daily activities. However, recent data suggest that the growth may stabilize during the current fourth quarter (Q4).
During the Q3 (July-September period), Indonesia’s economy expanded 3.51 percent, compared to last year’s same period, in contrast to the previous quarter this year (Q2) which saw a 7.07 percent growth, as reported by Statistics Indonesia on Friday (5th Nov).
A poll by Reuters had predicted that the growth slowed to 3.76 percent whilst the government officials anticipated 4.5 percent.
Indonesian authorities imposed stricter movement restrictions from July to August. Hence, the decision had impacted household consumption which makes up more than half of the country’s gross domestic product (GDP). Household consumption decreased by 1 percent in Q3 in contrast to 6 percent during the previous quarter.
The GDP for the year would most likely hit the lowest in Q3 but growth is expected to toughen during Q4 as the number of cases has significantly decreased in addition to higher vaccination rate, loosening the existing mobility restrictions, according to Radhika Rao, a DBS economist.
Recent data has also shown that the economic recovery in the country has been kickstarting ever since the restrictions consistently loosened, as seen from how the manufacturing purchasing managers’ index (PMI) hit a record high last month.
Nevertheless, it is still not the time to be complacent as Finance Minister Sri Mulyani has warned about external factors that may influence Indonesia’s economic growth outlook. Factors such as global inflation rate, China’s economic stagnancy, and the future of monetary tightening in the United States and European Union.
Source: The Straits Times