Indonesia: Growth moderates in Q3
November 5, 2021
GDP growth moderated to 3.5% year-on-year in the third quarter, from 7.1% in the second quarter. Q3’s reading came in slightly below market expectations and was weighed down by mobility restrictions, as well as a less favorable base effect.
The slowdown was broad-based, with private consumption, public spending, fixed investment and exports all weakening. Private consumption increased 1.0% in the third quarter, which was below the second quarter's 6.0% expansion. Public spending grew at the slowest pace since Q1 2021, expanding 0.7% (Q2: +8.0% yoy), while fixed investment growth moderated to 3.7% in Q3 from the 7.5% increase logged in the previous quarter.
On the external front, exports of goods and services increased 29.2% on an annual basis in the third quarter, which was below the second quarter's 32.0% expansion. In addition, growth in imports of goods and services softened to 30.1% in Q3 (Q2: +31.7% yoy).
Commenting on the short-term outlook, Nicholas Mapa, senior economist at ING, stated:
“We forecast Q4 GDP to improve as movement restrictions have been relaxed since Covid-19 daily infections steadied to below 1,000 over the past two months. Overall, we expect resurgent consumption alongside a sustained export rebound to help Indonesia have a stronger finish to the year.”