Indonesia: GDP growth picks up in the fourth quarter
Growth picked up in the final quarter of 2021, with GDP increasing 5.0% on an annual basis (Q3: +3.5% year-on-year). For the year as a whole, the economy rebounded 3.7% in 2021 (2020: -2.1% yoy).
The upturn reflected improvements in private consumption, public spending, fixed investment and exports. Private consumption increased 3.6% in the final quarter, which was above the third quarter’s 1.0% expansion. Government consumption improved to a 5.2% increase in Q4 (Q3: +0.6% yoy). Meanwhile, fixed investment growth strengthened to 4.5% in Q4, compared to the 3.8% increase logged in the prior quarter.
On the external front, exports of goods and services growth accelerated to 29.8% in Q4 (Q3: +29.2% yoy). Conversely, imports of goods and services growth eased to 29.6% in Q4 (Q3: +29.9% yoy).
Lastly, on a seasonally-adjusted quarter-on-quarter basis, GDP expanded 3.9% in Q4, accelerating from the previous period’s 0.6% rise. Q4’s reading marked the best result since Q1 1999.
Commenting on the on the outlook for the year ahead, Jonathan Sequeira and Andrew Tilton, analysts at Goldman Sachs, commented:
“As the reopening boost happened faster and was even larger than we anticipated (we had built in a re-opening boost primarily in Q2 2022), we scale down our sequential growth expectations for Q2 modestly further to 1.1% s.a. qoq, from 1.3% s.a. qoq previously. The overall effect of these changes is to push our annual 2022 GDP growth forecast up to 5.6% (from 5.4%, previously).”
Meanwhile, Nicholas Mapa, senior economist at ING, sees a more complicated outlook for the year:
“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. Thus, it will be imperative for Indonesia to ensure proper virus mitigation, which should help bolster consumption in the coming months.”