Indonesia Q4 Growth Accelerates More Than Expected

Economy

Indonesia’s economic growth accelerated more than expected in the fourth quarter underpinned by robust household spending, Statistics Indonesia reported Monday.

Gross domestic product grew 5.02 percent from the last year, following a 3.51 percent rise in the third quarter. This was also faster than the expected rate of 4.90 percent and marked the third consecutive growth.

On a quarterly basis, GDP advanced 1.06 percent, but slower than the 1.55 percent expansion posted in the third quarter.

In the whole year of 2021, GDP gained 3.69 percent after shrinking 2.07 percent in 2020.

On the expenditure-side, household consumption grew 3.6 percent and government spending by 5.25 percent. Investment gained 4.5 percent in the fourth quarter.

Exports and imports surged 29.8 percent and 29.6 percent, respectively.

Indonesia’s economy rebounded strongly in the final quarter of last year, but the recovery is now entering a more difficult phase, Gareth Leather and Alex Holmes, economists at Capital Economics, said.

Omicron will act as a small obstacle in the first quarter, the economist noted. But a bigger drag will come from falling commodity prices and policy tightening.

Prospects for recovery this year will likely be challenged by a pending increase in taxes coupled with projections for a pickup in inflation, both of which will likely weigh on household spending, Nicholas Mapa, an ING economist, said.

Thus it will be imperative for Indonesia to ensure proper virus mitigation, which should help bolster consumption in the coming months, Mapa added.

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